UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~ June 30, ~~2023~~ 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number: 001-41626

NYIAX, Inc.

(Exact name of registrant as specified in its charter)

Delaware		46-0547534
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

~~180~~900 ~~Maiden~~Easton ~~Lane~~Ave. STE 26-1088

~~New~~Somerset ~~York,~~NJ ~~NY 10005~~08873-1760

(917) 444-9259

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~February 914, ~~2023~~2025, there were 1516,~~561~~313,~~499 shares~~302 shares outstanding of the registrant’s common stock, par value $0.0001 ~~par~~per ~~value, issued and outstanding~~share.

Table of Contents

		Page	~~Page~~
PART I- FINANCIAL INFORMATION		1	1
Item 1:		1	1
	Condensed Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022		1
Condensed Financial Statements for the Six Months Ended June 30, 2024 (unaudited) and Year Ended December 31, 2023		1
	Condensed Statements of Operations for the three and nine-month periods ended September 30, 2023 (unaudited) and September 30, 2022 (unaudited)		2
Condensed Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023		1
	Condensed Statements of Shareholders’ (Deficit) Equity for the three-and nine-month periods ended September 30, 2023 (unaudited) and September 30, 2022 (unaudited)		3
Condensed Statements of Operations for the three and six-month period ended June 30, 2024 (unaudited) and June 30, 2023 (unaudited)		2
	Condensed Statements of Cash Flows for the nine-month periods ended September 30, 2023 (unaudited) and September 30, 2022 (unaudited)		5
Condensed Statements of Shareholders’ (Deficit) Equity for the three and six-month periods ended June 30, 2024 (unaudited) and June 30, 2023 (unaudited)		3
	Notes to Condensed Financial Statements (unaudited)		6
Condensed Statements of Cash Flows for the six-month period ended June 30, 2024 (unaudited) and June 30, 2023 (unaudited)		4
Item 1A	Cautionary Note Regarding Forward-Looking Statements and Risk Factors		34
Notes to Condensed Financial Statements (unaudited)		5
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3:	Quantitative and Qualitative Disclosures About Market Risk		32
Item 3: Quantitative and Qualitative Disclosures About Market Risk		33
Item 4:	Controls and Procedures		32
Item 4: Controls and Procedures		33
PART II - OTHER INFORMATION		34	34
Item 1:	Legal Proceedings		34
Item 1: Legal Proceedings		34
Item 1A:	Risk Factors		34
Item 1A: Risk Factors		34
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds		53
Item 3:	Defaults Upon Senior Securities		48
Item 3: Defaults Upon Senior Securities		54
Item 4:	Mine Safety Disclosures		48
Item 4: Mine Safety Disclosures		54
Item 5:	Other Information		48
Item 5: Other Information		54
Item 6:	Exhibits		48
Item 6: Exhibits		55
SIGNATURES		56	49

part I – FINANCIAL INFORMATION

Item 1. Financial Statements

NYIAX, Inc. Condensed Balance Sheets

~~Condensed~~As ~~Balance~~of ~~Sheets~~June 30, 2024 and December 31, 2023

	September 30, 2023 (Unaudited)			December 31, 2022
	June 30, 2024			December 31, 2023
Assets		(Unaudited)
Current assets
Cash	$	595,151		$	55,014
Cash	$	168,786		$	792,337
Accounts receivable, net		74,709			262,588
Accounts receivable, net		104,246			1,972,034
Prepaid and other current assets		35,784			5,000
Prepaid expenses and other current assets		6,500			92,497
Total current assets	$	705,644		$	322,602
Total current assets	$	279,532		$	2,856,868
Capitalized software development costs, net	$	98,280		$	196,572
Capitalized software development costs, net	$	245,718		$	393,157
Patents, net		2,809,917			3,404,958
Patents, net of amortization of $297,520		3,702,480			-
Property, plant and equipment, net		1,776			2,196
Property, plant and equipment, net		2,406			3,519
Operating lease right-of-use asset		-			244,451
Operating lease right-of-use asset		283,060			395,470
Security deposit		-			74,068
Deferred offering costs		-			848,531
Total assets	$	3,615,617		$	4,244,847
Security deposit		74,067			74,068
Liabilities and Shareholders’ Equity
Total assets	$	4,587,263		$	4,571,613
Liabilities and Shareholders’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	45,~~888~~796,~~967~~262		$	45,~~841~~327,~~045~~206
Convertible notes payable, net of deferred debt discounts of $0 and $214,265 as of September 30, 2023 and December 31, 2022, respectively		1,970,000			2,355,735
Convertible notes payable, net of deferred debt discounts ($ 439,577 as of June 30, 2024 and as of $0 December 31, 2023, respectively)		2,830,423			1,970,000
Accrued Payment-In-Kind Interest		86295,~~551~~342			71146,~~614~~655
Note payable – stockholder		100,500			-
Operating lease obligations, current portion		-			175,585
Operating lease obligations, current portion		172,234			162,503
Payables to shareholder-founders		100,500			264,000
Total current liabilities	$	79,~~218~~022,~~252~~527		$	7,~~430~~883,~~897~~446
Long-term liabilities
Operating lease obligations, net of current portion	$	~~138,236~~-		$	~~268~~92,~~385~~800
Note payable – stockholder		-			100,500
Total long-term liabilities		-		$	92,800
Total long-term liabilities		138,236			368,885
Total liabilities	$	9,022,527		$	7,976,246
Total liabilities	$	7,356,488		$	7,799,782
COMMITMENTS AND CONTINGENCIES
Shareholders’ equity (deficit)	$	~~1,556~~		$	~~1,237~~
Common stock $0.0001 par value, 125,000,000 common shares authorized; 15,561,499 and 12,370,002 common shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
Preferred shares: 10,000,000 authorized, none outstanding, par value $0.0001 per share	$	-		$	-
Preferred shares: 10,000,000 authorized, none outstanding, par value $0.0001 per share
Common stock $0.0001 par value, 125,000,000 common shares authorized; 15,690,719 and 15,611,827 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.		1,571			1,562
Additional Paid in Capital		5758,~~907~~952,~~311~~128			5058,~~023~~244,~~446~~754
Accumulated deficit		(6064,~~678~~360,~~092~~609	)		(5361,~~252~~977,~~852~~715	)
Total shareholders’ (deficit) equity	$	(25,~~769~~406,~~225~~910	)	$	(3,~~228~~731,~~169~~399	)
Total liabilities and shareholders’ (deficit) equity	$	43,~~587~~615,~~263~~617		$	4,~~571~~244,~~613~~847

The accompanying notes are an integral part of these unaudited condensed financial statements.

NYIAX, Inc. Condensed Statements of Operations

~~Condensed~~For ~~Statements~~the three- ofand ~~Operations~~six-month periods ended June 30, 2024 and 2023

For the Periods Ended

(unaudited)

	Three-Months Ended						Nine-Months Ended
	Three Months						Six Months
	September 30,			September 30,			September 30,			September 30,
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
	2024			2023			2024			2023
Revenue, Net	$	9783,~~820~~310		$	~~124~~88,~~987~~978		$	~~324~~164,~~835~~854		$	~~949~~227,~~475~~015
Cost of Sales		~~159~~141,~~440~~708			~~340~~168,~~876~~223			~~550~~310,~~084~~568			~~886~~390,~~290~~644
Gross Margin	$	(6158,~~620~~398	)	$	(~~215~~79,~~889~~245	)	$	(~~225~~145,~~249~~714	)	$	63(163,~~185~~629	)
Operating expenses
Technology and development	$	~~299~~79,~~007~~977		$	~~425~~288,~~878~~811		$	~~986~~325,~~669~~046		$	1687,~~254,219~~662
Selling, general and Administrative		1,225,833			1,444,714			4,356,987			5,990,212
Selling, general and administrative		822,203			1,583,324			1,813,704			3,131,154
Deferred offering cost write-off		~~177,481~~-			-			~~1,026,012~~-			-848,531
Forfeiture of founders’ deferred compensation		(367,803	)		-			(367,803	)		-
Forfeiture of deferred compensation		(45,213	)		-			(353,295	)		-
Depreciation and amortization		297,~~825~~731			-405			~~298~~595,~~635~~461			~~1,770~~810
Total operating expenses	$	1,~~632~~154,~~343~~698		$	1,~~870~~872,~~592~~540		$	62,~~300~~380,~~500~~916		$	74,~~246~~668,~~201~~157
Loss from operations	$	(1,~~693~~213,~~963~~096	)	$	(21,~~086~~951,~~481~~785	)	$	(62,~~525~~526,~~749~~630	)	$	(74,~~183~~831,~~016~~786	)
Other (income) expenses		-						-			-
Interest expense		~~452~~146,~~009~~490			45339,~~865~~498			~~899~~208,~~489~~749			1447,~~217,595~~480
Total other (income) expenses	$	~~452~~146,~~009~~490		$	45339,~~865~~498		$	~~899~~208,~~489~~749		$	1447,~~217,595~~480
Loss before provision for income taxes	$	(21,~~145~~359,~~972~~586	)	$	(2,~~132~~291,~~346~~283	)	$	(72,~~425~~735,~~238~~379	)	$	(85,~~400~~279,~~611~~266	)
Net loss	$	(21,~~145~~359,~~972~~586	)	$	(2,~~132~~291,~~346~~283	)	$	(72,~~425~~735,~~238~~379	)	$	(85,~~400~~279,~~611~~266	)
Net loss per share – basic and diluted	$	(0.14	)	$	(0.17	)	$	(0.53	)	$	(0.74	)
(Net loss per share – basic and diluted	$	(0.09	)	$	(0.17	)	$	(0.17	)	$	(0.40	)
Weighted Average O/S Shares-basic and diluted		15,~~410~~690,~~961~~484			1213,~~352~~561,~~942~~499			1415,~~043~~667,~~190~~722			1113,~~317~~359,~~535~~305

The accompanying notes are an integral part of these unaudited condensed financial statements.

NYIAX, Inc. Condensed Statements of Shareholders’ Equity (Deficit)

~~Condensed~~As ~~Statements~~ of ~~Shareholders’ (Deficit)~~June ~~Equity~~30, 2024 and 2023

(unaudited)

	Common Stock						Additional
	Shares Outstanding			Amount			Paid in Capital			Accumulated Deficit			Total
Balance - January 1, 2023		12,370,002		$	1,237		$	50,023,446		$	(53,252,852	)	$	(3,228,169	)
Balance - January 1, 2024		15,611,827		$	1,562		$	58,244,754		$	(61,977,715	)	$	(3,731,399	)
Share-based compensation		-			-			125,635			-			125,635
Cumulative effect adjustment from adoption of ASU 2020-06		-			-			(352,486	)		352,486			-
Issuance of common stock pursuant to restricted stock awards (share-based compensation), net of forfeiture		(250,000	)		(25	)		32,657			-			32,632
Share-based compensation		-			-			123,502			-			123,502
Conversion of Convertible Notes		1,441,497			144			2,719,198			-			2,719,342
Conversion of payables to shareholder-founders interest		73,607			8			294,416			-			294,424
Deferred debt discount on 2023 convertible notes payable		-			-			16,000			-			16,000
Deferred debt discount on 2024 convertible notes payable		-			-			190,805			-			190,805
Net Loss		-			-			-			(21,~~987~~375,~~985~~794	)		(21,~~987~~375,~~985~~794	)
Balance - March 31, 2023		13,561,499		$	1,356		$	52,916,936		$	(56,240,837	)	$	(3,322,545	)
Balance - March 31, 2024		15,685,434		$	1,570		$	58,500,991		$	(63,001,023	)	$	(4,498,462	)
Share-based compensation		-			-			~~149~~123,~~467~~502			-			~~149~~123,~~467~~502
Deferred debt discount on 2023 convertible notes payable		-			-			704,975			-			791,685
Conversion of payables to shareholder-founders interest		5,285			1			21,137			-			21,138
Net Loss											(2,291,283	)		(2,291,293	)
Deferred debt discount on 2024 convertible notes payable		-			-			306,498			-			306,498
Balance - June 30, 2023		13,561,499		$	1,356		$	53,771,378		$	(58,532,120	)	$	(4,759,386	)
Net Loss											(1,359,586	)		(1,359,586	)
Share-based compensation		-			-			136,133			-			136,133
Balance - June 30, 2024		15,690,719		$	1,571		$	58,952,128		$	(64,360,609	)	$	(5,406,910	)
Deferred debt discount on 2023 convertible notes payable		-			-			-			-			-
Issuance of common stock for patents acquisition		2,000,000			200			3,999,800			-			4,000,000
Net Loss											(2,145,972	)		(2,145,972	)
Balance - September 30, 2023		15,561,499		$	1,556		$	57,907,311		$	(60,678,092	)	$	(2,769,225	)

	Common Stock						Additional
	Shares Outstanding			Amount			Paid in Capital		Accumulated Deficit			Total
Balance - January 1, 2023		12,370,002		$	1,237		$	50,023,446	$	(53,252,852	)	$	(3,228,169	)
Share-based compensation		-			-			125,635		-			125,635
Issuance of common stock pursuant to restricted stock awards (share-based compensation), net of forfeiture		(250,000	)		(25	)		32,657		-			32,632
Conversion of Convertible Notes		1,441,497			144			2,719,198		-			2,719,342
Deferred debt discount on 2023 convertible notes payable		-			-			16,000		-			16,000
Net Loss		-			-			-		(2,987,985	)		(2,987,985	)
Balance - March 31, 2023		13,561,499		$	1,356		$	52,916,936	$	(56,240,837	)	$	(3,322,545	)
Share-based compensation		-			-			149,467		-			149,467
Deferred debt discount on 2023 convertible notes payable		-			-			704,975		-			704,975
Net Loss										(2,291,283	)		(2,291,283	)
Balance - June 30, 2023		13,561,499		$	1,356		$	53,771,378	$	(58,532,120	)	$	(4,759,386	)

The accompanying notes are an integral part of these condensed financial statements.

NYIAX, Inc. Condensed Statements of Cash Flows

~~Condensed~~For ~~Statements~~the six-month ofperiod ~~Shareholders’~~ended June 30, ~~(Deficit)~~2024 ~~Equity~~and 2023

(unaudited)

	Common Stock						Additional
	June 30,			June 30,
	Shares						Paid in		Accumulated
	2024			2023
	Outstanding			Amount			Capital		Deficit			Total
Cash flows from operating activities
Balance – January 1, 2022		10,243,442		$	1,024		$	38,089,295	$	(42,110,073	)	$	(4,019,754	)
Net loss	$	(2,735,379	)	$	(5,279,266	)
Share-based compensation								969,511					969,511
Adjustments to reconcile net income to net cash provided by operating activities
Deemed Dividend from Inducement to Exercise Warrants		-			-			28,600		(28,600	)		-
Depreciation and amortization		693,755			99,102
Issuance of common stock pursuant to exercise of warrants		224,693			22			1,225,788					1,225,810
Operating lease right-of-use asset		(23,934	)		(5,138	)
Net Loss										(3,789,643	)		(3,789,643	)
Accrued PIK Interest		150,749			126,252
Balance – March 31, 2022		10,468,135		$	1,046		$	40,313,194	$	(45,928,316	)	$	(5,614,076	)
Debt discount amortization		57,727			321,247
Share-based compensation		247,004			307,734		$	~~246,112~~				$	~~246,112~~
Issuance of common stock pursuant to restricted stock awards (share-based compensation)		290,000			29			167,098		-			167,127
Provision for allowance for Credit Losses		-			106,960
Conversion of Convertible Note Payable and accrued interest to common shares		1,583,807			158			7,918,849		-			7,919,007
Forfeiture of Deferred Compensation		(353,295	)		-
Issuance of common stock pursuant to exercise of warrants		11,000			1			60,021		-			60,022
Deferred offering cost write-off, net		-			848,531
Net Loss										(2,478,622	)		(2,478,622	)
Change in operating assets and liabilities:
Balance - June 30, 2022		12,352,942		$	1,234		$	48,705,274	$	(48,406,938	)	$	299,570
Accounts receivable		187,878			1,759,025
Share-based compensation		-			-		$	135,136		-		$	135,136
Payables to shareholder-founders		-			87,497
Issuance of common stock pursuant to restricted stock awards (share-based compensation)		-			-			220,132		-			220,132
Prepaid expense		(30,784	)		-
Deferred debt discount on 2022 convertible notes payable		-			-			287,385		-			287,385
Security deposit		74,068			-
Net Loss										(2,132,346	)		(2,132,346	)
Accounts payable and accrued expenses		822,348			(192,254	)
Balance – September 30, 2022		12,352,942			1,234		$	49,347,927	$	(50,539,284	)	$	(1,190,123	)
Net cash used in operating activities	$	(909,863	)	$	(1,820,310	)
Cash flows from financing activities
Proceeds from convertible notes payable, net of cash discount	$	1,300,000		$	2,170,000
Proceeds from payables to shareholder-founders		198,000			-
Repayment of payables to shareholder-founders		(48,000	)		-
Net cash provided by financing activities	$	1,450,000		$	2,170,000
Net increase (decrease) in cash and cash equivalents	$	540,137		$	349,690
Cash and cash equivalents - Beginning of period	$	55,014		$	792,337
Cash and cash equivalents - End of period	$	595,151		$	1,142,027
Supplemental disclosures of non-cash flow investing and financing activities:
Deferred debt discount on convertible note payable	$	497,304		$	720,975
Conversion of convertible notes payable and accrued interest to common shares		-		$	2,719,342
Conversion of payables to shareholder-founders & accrued interest	$	315,553

The accompanying notes are an integral part of these unaudited condensed financial statements.

NYIAX, Inc.

Condensed Statements of Cash Flows

For the Nine Months Ended

(unaudited)

	For Nine Month Periods Ended
	September 30,			September 30,
	2023			2022
Cash flows from operating activities
Net loss	$	(7,425,238	)	$	(8,400,611	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		446,072			149,675
Operating lease right-of-use asset		(8,008	)		9,776
Accrued PIK Interest		185,838			316,765
Debt discount amortization		713,681			900,979
Share-based compensation		443,868			1,737,990
Bad Debt expense		106,959			-
Forgiveness of stockholders payables		-			(510,000	)
Deferred offering cost write-off		1,026,012			-
Forfeiture of Founders’ deferred compensation		(367,803	)		-
Change in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable		1,760,827			1,549,366
Prepaid expense		85,997			(165,286	)
Increase (decrease) in:
Accounts payable and accrued expenses		238,244			(342,088	)
Total adjustments	$	4,631,687		$	3,647,177
Net cash used in operating activities	$	(2,793,551	)	$	(4,753,434	)
Net cash used in investing activities
Acquisition of Fixed Assets		-			(2,061	)
Net cash used in investing activities		-			(2,061	)
Cash flows from financing activities
Proceeds from convertible notes payable, net of cash discount	$	2,170,000		$	1,237,400
Proceeds from issuance of common stock pursuant to exercise of warrants		-			1,285,832
Deferred offering cost		-			(321,385	)
Net cash provided by financing activities	$	2,170,000		$	2,201,847
Net (decrease) in cash and cash equivalents	$	(623,551	)	$	(2,553,648	)
Cash - Beginning of period		792,337			3,387,200
Cash - End of period	$	168,786		$	833,552

	For Nine Month Periods Ended
	September 30,		September 30,
	2023		2022
Supplemental disclosures of cash flow information:
Supplemental disclosures of non-cash flow investing and financing activities:
Deferred debt discount on convertible notes payable	$	720,975	$	287,385
Deemed Dividend from Inducement to Exercise Warrants		-		28,600
Conversion of convertible notes payable and accrued interest to shares		2,719,341		7,919,007
Issuance of common stock for patents acquisition		4,000,000		-

The accompanying notes are an integral part of these condensed financial statements.

NYIAX, Inc.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the ~~nine~~six months period ended ~~September~~ June 30, 2024 ~~2023~~ (unaudited)

Note 1 — Nature of Operations

Brief Overview:

NYIAX, Inc. (the “Company” or “NYIAX”) was incorporated on July 12, 2012, in the State of Delaware.

NYIAX connects Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media advertising sales contracts. NYIAX receives a commission or fee upon completion of the media advertising contract. NYIAX does not take ownership or positions of the media at any time during the process.

Going Concern, Cash Flows, Liquidity, Cash Flows and Capital Resources

The Company believes it does not have sufficient cash to meet working capital and capital requirements for at least twelve months from the issuance ~~date~~ of these financial statements.

Historically, the Company’s liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and issuance of convertible note payable. Without a new loan or other equity support, the Company would not be able to support the current operating plans through twelve months from the issuance ~~date~~ of these financial statements. No assurance can be given at this time, however, as to whether we ~~will~~ will be able to raise new equity or loan support.

For the ~~nine~~six months ended ~~September~~June 30, ~~2023~~2024, the Company~~’s operations~~ lost approximately $~~7.4 million. The Company generated negative cash flows from operations of approximately $~~2.87 million ~~for the nine months ended September 30, 2023 of which approximately $2~~.~~5 million were non-cash expenses.~~

AsThe ofCompany ~~September~~generated ~~30,~~negative ~~2023,~~cash ~~NYIAX~~flows ~~had~~from operations ~~total current assets~~ of ~~approximately~~ $~~280~~ 909,~~000~~863 offor ~~which~~the ~~approximately~~six-month ~~$169,000~~period ~~was~~ended ~~cash~~June ~~and~~30, ~~total~~2024. ~~current~~Historically, ~~liabilities~~the ofCompany’s ~~approximately~~liquidity ~~$7.2~~needs ~~million~~have ofbeen ~~which~~met by ~~approximately~~the ~~$2.1 million~~sale ~~were~~of ~~convertible~~common ~~notes~~shares, ~~payable~~the ~~and~~issuance ~~accrued~~of ~~payment~~common inshares ~~kind~~through ~~interest~~the ~~payable~~exercise inof ~~the~~warrants, ~~Company’s~~and ~~common~~sale ~~shares~~convertible note payable.

~~Future~~As ~~capital~~of ~~requirements~~June ~~will depend on many factors~~30, ~~including the Company’s rate of revenue growth and its level of expenditures. Additionally~~2024, ~~the~~NYIAX ~~Company~~had istotal ~~planning~~current anassets ~~initial public offering~~ of ~~its common stock. To the extent that the initial public offering is not successful~~$705,644, orof ~~that~~which ~~existing capital resources~~$595,151 ~~revenue~~was ~~growth~~cash and ~~cash~~total ~~flow~~current ~~from~~liabilities ~~operations~~of ~~are~~approximately ~~not~~$9 ~~sufficient to fund future activities~~million, the Company may need to raise additional funds through equity or debt financing or curtail expenses. On October 31, 2023, NYIAX filed an amended registration statement on Form S-1 with plans to issue 1,875,000 shares of ~~its~~which ~~common~~approximately ~~stock at a price of~~ $43.002 ~~per share. No assurances can be provided that any additional~~million ~~funding~~convertible ornotes ~~alternative~~payable, ~~financing~~accrued ~~will~~interest, beand ~~available~~payables ~~at terms acceptable~~ to ~~the Company, if at all~~shareholder-founders.

~~Management~~To ~~must~~enable ~~evaluate~~the ~~whether~~Company ~~there~~to ~~are~~meet ~~conditions~~immediate capital orrequirements ~~events~~until ~~considered~~longer interm ~~the~~requirements ~~aggregate,~~can ~~that~~be ~~raise~~met, ~~substantial~~through ~~doubt~~February ~~about~~14, 2025 the Company’s ~~ability~~sold toapproximately ~~continue~~$1.3 asmillion aof ~~going~~the ~~concern within~~2024A ~~one~~Convertible ~~year~~Note ~~after~~Payable ~~the~~approximately ~~date~~$0.9 ~~that~~million of the ~~financial~~2024B ~~statements~~Convertible ~~are~~Note ~~issued~~Payable and $0.2 million of the 2025A Convertible Note Payable.

Due to these factors, substantial doubt exists regarding the Company’s ability to continue as a going concern through twelve months from the issuance date of these financial statements. Management has taken steps to significantly reduce our losses by curtailing certain aspects of our operations or expansion activities. The financial statements for the period ended September 30, 2023, do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.5

6The Company’s financial advisor, representative and lead underwriter for the Offering was WestPark Capital, Inc. (“WestPark”). Due to multiple factors, on March 5, 2024, WestPark and the Company mutually agreed to not proceed with the Offering.

NYIAX expects that in order to fully realize its longer-term goals, it will need to raise additional debt and equity capital. However, no assurances can be provided that additional funding or alternative financing will be available at terms acceptable to the Company, if at all.

The Company is also subject to certain business risks, including dependence on key employees, competition, market acceptance of the Company’s platform, ability to source demand from buyers of advertising inventory and dependence on growth to achieve its business plan.

The Company has been, and could in the future be, adversely affected by health epidemics, such as the global COVID-19 pandemic. While the COVID-19 pandemic has generally accelerated a move from traditional media to digital media, many marketers have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-related impacts, which have negatively impacted, and may continue to negatively impact, our revenue and results of operations, the extent and duration of which we may not be able to accurately predict. As a result, our financial condition and results of operations may be adversely impacted.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by US GAAP. In the opinion of management, the unaudited condensed ~~financial~~ financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair ~~presentation~~statement of the ~~balances~~ balances and results for the period presented. Operating results for the period from ~~December 31~~January 1, ~~2022~~2024 through ~~September~~June 30, ~~2023~~2024 are not ~~necessarily~~ necessarily indicative of the results that may be expected through December 31, ~~2023~~2024.

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included elsewhere in ~~our~~this Annual Report on Form 10-K asfor ~~filed~~the onyear ~~July~~ended 21December 31, 2023.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from these estimates.

On an on-going basis, management evaluates its estimates, primarily those related to: (1) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (2) ~~allowances for doubtful accounts, (3)~~ the useful lives of property and equipment and capitalized software development costs, (43) income taxes, (54) the valuation of share-based compensation, (65) assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options and warrants (6) allowance for expected credit losses, (7) impairment estimates, and (78) the recognition and disclosure of contingent liabilities. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Estimates relating to the valuation of share-based compensation, options and warrants, require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ materially from those estimates under different assumptions or circumstances.

7Cash and Cash Equivalents

Concentrations of Credit risk

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents in the financial statements.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash, and accounts receivable. The Company maintains its cash with financial institutions providing deposits insurance which exceed the Federal Deposit Insurance Corporation (“FDIC”) federally insured limits.6

~~The~~Financial ~~Company~~instruments ~~considers~~that ~~all~~potentially ~~highly liquid investments~~subject ~~with~~the anCompany ~~original~~to ~~maturity~~concentration of ~~three months~~credit orrisk ~~less~~consist ~~when~~principally ~~purchased~~of cash, toand beaccounts ~~cash equivalents~~receivable. ~~There~~The ~~were~~Company nomaintains its cash ~~equivalents~~with financial atinstitutions ~~September 30,~~which ~~2023~~exceed ~~and~~the ~~December 31,~~Federal ~~2022~~Deposit Insurance Corporation (“FDIC”) federally insured limits.

AsThe ofCompany ~~September~~considers ~~30,~~all ~~2023~~highly ~~two~~liquid ~~Media Buyers represented~~investments ~~26%~~with ~~and~~an ~~20%~~original maturity of ~~accounts~~three months ~~receivable.~~or Asless ofwhen ~~September 30~~purchased, ~~2023,~~to ~~two~~be ~~Media~~cash ~~Sellers represented 80% and 10% of accounts payable~~equivalents. ~~For~~There ~~the~~were ~~nine months~~no ~~ended~~cash ~~September~~equivalents ~~30,~~at ~~2023~~March 31, 2024 ~~two customers represented 47%~~ and ~~9% of revenue~~December 31, ~~net~~2023.

AsPeriodically, ofthe ~~December~~Company ~~31,~~may ~~2022,~~carry ~~two~~cash ~~Media~~balances at ~~Buyers~~financial ~~represented 67%~~institutions ~~and~~more ~~20%~~than the federally insured limit of ~~accounts~~$250,000 per ~~receivable~~institution. The Asamount in excess of ~~December~~the 31FDIC insurance as of June 30, ~~2022~~2024, ~~two~~was ~~Media~~approximately ~~Sellers~~$345,000. ~~represented~~The ~~61%~~Company has not experienced losses on account balances and 8%management believes, based upon the quality of ~~accounts~~the ~~payable~~financial institutions, that the credit risk with regard to these deposits is not significant.

As of September 30, 2022, two Media Buyers represented 80% and 11% of accounts receivable. As of September 30, 2022, one Media Seller represented 44% of accounts payable. For the nine months ended September 30, 2022, one customer represented 84% of revenue, net.

For the nine months ended September 30, 2022, one customer represented 84% of net revenue. As of September 30, 2022, one Media Seller represented 44% of accounts payable and two Media Buyers represented 80% and 11% of accounts receivable.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following:

~~Level 1 —~~	Level 1 —	Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
~~Level 2 —~~	Level 2 —	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
	Level 3 —	Unobservable inputs. Observable inputs are based on market data obtained from independent sources.

Level 3 — Unobservable inputs. Observable inputs are based on market data obtained from independent sources.

The carrying amounts of cash, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.

8Concentrations of Risk

As of June 30, 2024, 3 Media Buyers represented 30%, 29% and 22% of accounts receivable. For the six months ended June 30, 2024, 4 customers represented 37%, 28%, 18% and 10% of revenue, net. As of June 30, 2024, two Media Sellers represented 81% and 10% of accounts payable.

As of December 31, 2023, three Media Buyer represented 34%, 25% and 18% of accounts receivable. As of December 31, 2023, two Media Sellers represented 80% and 10% of accounts payable.

For the six months ended June 30, 2023, two customers represented 50% and 11% of revenue, net.

Accounts Receivable, Net

InAccounts ~~June~~receivable ~~2016,~~consists ~~the~~of ~~Financial~~amounts ~~Accounting Standards~~billed ~~Board,~~to orMedia ~~the~~Buyers. ~~FASB~~Accounts receivable, ~~issued~~net ~~ASU~~are ~~2016-13~~carried –at ~~Measurement~~their ofcontractual ~~Credit~~amounts, ~~Losses~~less ~~on Financial Statements. The new standard requires that the Company recognize~~ an ~~allowance~~estimate for ~~losses~~uncollectible ~~on accounts receivable in an amount equal to the current expected credit losses~~amounts. ~~The estimation~~Management ofestimates the allowance isfor bad debts based on anexisting ~~analysis~~economic ofconditions, historical ~~loss~~ experience, ~~current~~the ~~receivables~~financial ~~aging, and management’s assessment of current~~ conditions ~~and reasonable and supportable expectation~~ of ~~future~~the ~~conditions~~customers, and asthe ~~well~~amount asand anage ~~assessment~~ of ~~specific~~past ~~identifiable customer~~due accounts ~~considered at risk or uncollectible~~. InReceivables ~~November~~are ~~2019,~~considered ~~the~~past ~~FASB~~due ~~issued~~if ~~ASU~~full ~~2019-10~~payment –is ~~Financial~~not ~~Instruments~~received ~~– Credit~~by ~~Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended~~ the ~~effective~~contractual ~~date~~due ~~for certain companies~~date. ~~The~~Past ~~standard~~due isaccounts ~~effective~~are ~~for~~generally ~~public~~written ~~companies~~off ~~eligible~~against tothe beallowance ~~smaller reporting companies~~ for ~~annual~~credit ~~and~~losses ~~interim periods~~only ~~beginning~~ after ~~December~~all ~~15,~~collection ~~2022.~~attempts ~~On January 1, 2023, the Company adopted ASU 2016-13, using a modified retrospective approach. The adoption of this standard did not~~ have ~~an effect on the Company’s financial position, results of operations, or cash flows~~been exhausted.

~~Accounts~~The ~~receivable~~Company ~~consists~~performs ofongoing ~~amounts~~credit ~~billed~~evaluation. toThe ~~Media~~allowance ~~Buyers.~~for ~~Accounts~~allowance ~~receivable,~~for ~~net~~expected ~~are~~credit ~~carried~~losses atis ~~their~~determined ~~contractual~~based ~~amounts,~~on ~~less~~historical ancollection ~~estimate~~experience ~~for~~and ~~uncollectible~~the ~~amounts.~~review ~~Management~~in each ~~estimates~~period of the ~~allowance~~status ~~for~~of ~~bad~~the ~~debts~~then-outstanding ~~based~~accounts onreceivable, ~~existing~~while ~~economic~~taking ~~conditions,~~into ~~historical~~consideration ~~experience~~current client information, ~~the~~subsequent collection ~~financial~~history ~~conditions~~and ofother ~~the~~relevant ~~customers, and~~data. The Company reviews the ~~amount~~allowance ~~and~~for ~~age~~expected ofcredit ~~past~~losses ~~due~~on ~~accounts~~a quarterly basis. ~~Receivables~~For ~~are~~the six-month ~~considered~~period ~~past~~ended ~~due~~June if30, ~~full~~2024 ~~payment~~the isCompany ~~not~~had ~~received~~no byallowance ~~the~~for ~~contractual~~expected ~~due date.~~credit ~~Past~~losses ~~due~~and no direct write-offs of accounts ~~are~~receivable. For ~~generally~~the ~~written~~year ~~off~~ended ~~against~~December 31, 2023, the Company had an allowance for ~~bad~~expected ~~debts~~credit ~~only~~losses ~~after~~of ~~all~~$106,959 ~~collection~~and ~~attempts~~no ~~have~~direct ~~been~~write-offs ~~exhausted~~of accounts receivable.

The Company performs ongoing credit evaluations of Media Buyers. The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The allowance for doubtful accounts is determined based on historical collection experience and the review in each period of the status of the then-outstanding accounts receivable, while taking into consideration current client information, subsequent collection history and other relevant data. The Company reviews the allowance for doubtful accounts on a quarterly basis. For the year ended and December 31, 2022, the Company had no allowance for doubtful accounts and no write-offs of accounts receivable. For the period ended September 30, 2023, the Company had an allowance for doubtful accounts of $106,959 and no direct write-offs of accounts receivable.7

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization, which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets, as follows: 3 to 5 years for office equipment and software.

Repair and maintenance costs are expensed as incurred and major improvements are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the Company’s operating results.

9Patents

Patents and other intellectual property acquired through purchase are recorded at the time of acquisition at cost of the acquisition plus the transaction costs, if material, of the acquired assets.

Amortization commences when the Patents are available for its intended use over their useful lives.

In accordance with ASC 360 Impairment Accounting for the Impairment or Disposal of Long-Lived Assets, the Company periodically reviews the carrying value of long-lived assets whenever events or changes in circumstances indicate that the historical carrying value of the long-lived assets may have been impaired. Management determined that as of September 30, 2024, that certain patents with a net book value of $ 2,512,396 were impaired, and accordingly recorded a charge of $ 2,512,396 to fully write off these patents.

Capitalized Software Development Costs

The Company capitalizes or expenses costs associated with creating internally developed software related to the Company’s technology infrastructure in accordance with ASC 350 – 40, Intangibles — Goodwill and Other — Internal Use Software, that generally relate to software that the Company does not intend to sell or market.

All costs incurred during the preliminary project stages are expensed as incurred. Once the projects have been committed to and it is probable that the projects will meet functional requirements, costs are capitalized in accordance with guidance. Amortization commences when the software is available for its intended use. The estimated useful life of the capitalized software development costs is five years. The Company commenced amortizing the capitalized software development costs related to its platform in January 2020.

Certain long-lived assets including capitalized software development costs are also subject to measurement at fair value on a nonrecurring basis if they are deemed to be impaired as a result of an impairment review. For the ~~nine~~three-month period ended ~~September~~June 30, ~~2023~~2024 and the year ended December 31, ~~2022~~2023, no impairments were recorded on those assets.

~~Acquisition~~Expected ofcredit ~~Intellectual Property~~loss

~~Intellectual~~The ~~property~~Company ~~acquired~~accounts ~~through~~for ~~purchase~~expected credit losses in accordance with ~~are~~ASU ~~recorded~~No. at2016-13, ~~the~~Financial ~~time~~Instruments of— ~~acquisition~~Credit atLosses ~~cost~~(Topic 326): Measurement of ~~the~~Credit ~~acquisition~~Losses ~~plus~~on ~~the~~Financial ~~transaction~~Instruments ~~costs,~~requires entities ifto ~~material,~~use ofa ~~the~~current ~~acquired~~lifetime ~~assets~~expected ~~in accordance~~credit ~~with~~loss ~~ASC~~methodology ~~805-50~~to measure impairments of certain financial assets.

Asset acquisitions in which the consideration given is cash are measured by the amount of cash paid. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued) measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.

Each intellectual property asset, patent’s valuation will be amortized over its useful life. The Company has concluded that patent portfolios have a determinant useful life in accordance with the patents’ expiration dates.

Additionally, the Company will prepare periodic reviews of the patent portfolio in accordance with ASC 820 and ASC 360 to assess if a write-down is required. For the nine-month period ended September 30, 2023, no impairments were recorded on those assets.

Revenue Recognition

NYIAX brings together Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media sales contracts. NYIAX receives a fee upon completion of the media contract. NYIAX does not take ownership of or positions in the media at any time during the process.

Generally, the Company bills Media Buyers the gross amount of advertising, including the Company’s commissions or fees in a single invoice and pays the Media Seller upon receipt. The Company’s accounts receivable are recorded at the amount of gross billings for the amounts it is responsible to collect, and accounts payable are recorded at the amount payable to Media Seller.

Substantially all of the Company’s revenues are recognized at the point in time that the (i) contract reconciliations are completed, (ii) accepted by the Media Buyer and Media Seller, and (iii) NYIAX’s performance obligations are completed.

The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship.

Revenue is recognized based on the five-step process outlined in the Accounting Standards Codification (“ASC”) 606:

Step 1 — Identify the Contract with the Customer — A contract exists when (a) the parties to the contract have approved the contract and are committed to perform their respective obligations, (b) the entity can identify each party’s rights regarding the goods or services to be transferred, (c) the entity can identify the payment terms for the goods or services to be transferred, (d) the contract has commercial substance and it is probably that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Step 2 — Identify Performance Obligations in the Contract — Upon execution of a contract, the Company identifies as performance obligations each promise to transfer to the customer either (a) goods or services that are distinct, or (b) a series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. To the extent a contract includes multiple promised goods or services, the Company must apply judgement to determine whether the goods or services are capable of being distinct within the context of the contract. If these criteria are not met, the goods or services are accounted for as a combined performance obligation.

Step 3 — Determine the Transaction Price — When (or as) a performance obligation is satisfied, the Company shall recognize as revenue the amount of the transaction price that is allocated to the performance obligation. The contract terms are used to determine the transaction price. Generally, all contracts include fixed consideration. If a contract did include variable consideration, the Company would determine the amount of variable consideration that should be included in the transaction price based on expected value method. Variable consideration would be included in the transaction price, if in the Company’s judgement, it is probable that a significant future reversal of cumulative revenue under the contract would not occur.

Step 4 — Allocate the Transaction Price — After the transaction price has been determined, the next step is to allocate the transaction price to each performance obligation in the contract. If the contract only has one performance obligation, the entire transaction price will be applied to that obligation. If the contract has multiple performance obligations, the transaction price is allocated to the performance obligations based on the relative standalone selling price at contract inception.

Step 5 — Satisfaction of the Performance Obligations (and Recognize Revenue) — Revenue is recognized when (or as) goods or services are transferred to a customer. The Company satisfies each of its performance obligations by transferring control of the promised good or service underlying that performance obligation to the customer. Control is the ability to direct the use of and obtain substantially all of the remaining benefits from an asset. It includes the ability to prevent other entities from directing the use of and obtaining the benefits from an asset. Indicators that control has passed to the customer include: a present obligation to pay; physical possession of the asset; legal title; risks and rewards of ownership; and acceptance of the asset(s). Performance obligations can be satisfied at a point in time or over time.

Substantially all of the Company’s revenues are recognized when the contract reconciliations are completed and accepted by the Media Buyer and Media Seller.

The Company maintains agreements with each Media Buyer and Media Seller which set out the terms of the relationship.

The Company has determined that it is acting as an agent for the Media Seller as (i) NYIAX does not obtain control of the Seller’s media (goods & services) before transferring control to the Buyer. The Seller has control of the media. Specifically, NYIAX does not control the specified media before transferring the media to the Media Buyer, the Company is not primarily responsible for the performance of the Media Seller, nor can the Company redirect those services to fulfill any other contracts. (ii) NYIAX does not have inventory or credit risk for the media, and (iii) the Media Seller establishes the pricing in the Smart-Contracts (self-executing contracts with the terms of the agreement between buyer and seller standardized,. and the Media Buyers and Media Sellers agree the pricing.

119

Share-Based Compensation

The share-based compensation expense related to stock options and restricted stock awards which are referred to collectively as options and awards granted under the Company’s employee option plans, is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. We use the Black-Scholes model to calculate the fair value for all options granted, based on the inputs relevant on the date granted, such as the fair value. of our shares, prevailing risk-free interest rate, etc. The value of the portion of the award, after considering potential forfeitures, that is ultimately expected to vest is recognized as expense in our statements of operations over the requisite service periods. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions.

Deferred Offering Cost Write-off

It Is the Company’s policy to defer the recognition of deferred offering costs Pursuant to the Codification of Staff Accounting Bulletins, Topic 5: Miscellaneous Accounting A. Expenses of Offering. As of December 31, 2022, $848,531 of deferred offering costs were recorded on the balance sheet.

On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission was declared effective by the SEC.

In March, 2023, the Company’s financial advisor, representative and lead underwriter for ~~its initial public offering (~~the ~~“Offering”)~~offering, Boustead Securities LLC (“Boustead”), informed the Company of its decision not to proceed with pricing of the Company’s Offering.

InPursuant ~~accordance~~to ~~with~~ the Codification of Staff ~~Accounting~~ Accounting Bulletins / Topic 5: Miscellaneous Accounting, ~~the~~A. ~~Company~~Expenses ~~has~~of ~~written off these costs~~Offering, ~~$848,531, during~~ the ~~three-month~~Company ~~period ended~~had ~~March~~been ~~31,~~deferring ~~2023.~~these ~~And,~~expenses ~~for~~until the ~~three-month~~offering. As ~~period~~of ~~ended~~December ~~September 30~~31, ~~2023~~2022, ~~the Company recorded~~ $~~177~~848,~~481~~531 of deferred offering costs ~~which~~ were ~~written~~recorded ~~off~~on ~~during~~ the ~~three-month~~balance ~~period~~sheet. ~~ended~~In ~~September~~accordance ~~30,~~with ~~2023~~the asCodification ~~a result~~ of ~~Spartan Capital Securities, LLC’s~~ ~~decision~~Staff ~~not~~Accounting toBulletins ~~continue~~/ asTopic ~~lead~~5: ~~underwriter~~Miscellaneous ~~on October 6~~Accounting, ~~2023 (~~the Company ~~engaged~~has ~~Spartan~~written ~~Capital Securities,~~these ~~LLC,~~costs asoff ~~lead~~during ~~underwriter, deal manager and investment banker for~~ the ~~Offering~~three-month onperiod ended ~~April~~March 1231, 2023).

Income Taxes

The Company records income tax expense in accordance with ASC – 740 Income Taxes, as amended mandating how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. The standards require the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are more-likely-than-not of being sustained upon examination by the applicable tax authority, based on the technical merits of the tax position, and then recognizing the tax benefit that is more-likely-than-not to be realized. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current reporting period. The Company has analyzed its tax positions and has concluded that asfor ~~of September~~the periods ended March 31, June 30, ~~2023~~2024, and December 31, ~~2022~~ 2023, no uncertain positions are taken or are expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements.

The Company’s policy is to record interest expense and penalties pertaining to income taxes in operating expenses. ~~For the periods ended March 31, 2023, September 30, 2023 and December 31, 2022, there were no interest and penalties expenses recorded and no accrued interest and penalties.~~

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including net operating loss carryforwards (“NOL’s”), and liabilities, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the deferred income tax asset is dependent on generating sufficient taxable income in future years. The amount of the deferred income tax asset considered realizable, if any, could be reduced in the near term if estimates of future taxable income are met.

Earnings Per Share

In accordance with ASC – 260 Earnings Per Share, basic earnings per share (EPS) is calculated by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share per share is computed by dividing net income by the weighted average number vested of common shares, plus the net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities. In periods when losses are reported, the weighted-average number of common shares outstanding exclude common stock equivalents because their inclusion would be anti-dilutive. The Company has issued employee incentive options and warrants. These employee incentive options and warrants are excluded from the calculation as the employee incentive options and warrants are anti-dilutive.

~~Common~~As of June 30, 2024, the Company excluded the ~~Stock~~common ~~Equivalents~~stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

As of September 30, 2023, and September 30, 2022, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

	As of June 30, 2024
Equity Incentive Plans		2,934,038
Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest		953,557
Selling Agent and Advisor Warrants		23,538
Warrants Issued with Common Stock Offerings		932,374
Warrants Issued with Convertible Notes Offerings		1,783,400
		6,626,907

	As of September 30, 2023		As of September 30, 2022
Equity Incentive Plans		3,086,626		3,086,626
Selling Agent and Advisor Warrants		23,538		362,191
Warrants Issued with Common Stock Offerings		932,374		889,500
Warrants Issued with Convertible Notes Offerings		1,133,400		352,188
Common Stock Issuable Upon Conversion of Convertible Notes, including PIK Interest		1,028,276		824,650
Total Common Stock Equivalents		6,204,214		5,515,155

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU ~~No.~~ 2020-06, Debt - Debt~~—Debt~~ with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—- Contracts in Entity’s Own Equity (Subtopic 815-40) – : Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ~~amendments~~guidance simplified the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock, thereby limiting the accounting results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are ~~effective~~(1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception ~~fiscal~~from ~~years~~derivative ~~beginning~~accounting ~~after~~and ~~December~~(2) 15convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amended the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, ~~2023~~the guidance eliminated the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The Company ~~evaluated~~adopted the ~~any~~standard ~~potential~~effective ~~impact~~January ~~from~~1, ~~ASU~~2024 ~~2021~~using the modified retrospective transition method. On January 1, 2024, the Company recorded a transition adjustment to debit additional paid-07in capital and ~~believes~~credit itretained ~~will~~deficit ~~have~~for $352,486, representing the effect of the original nobifurcated ~~material~~conversion ~~impact~~feature onrecorded ~~our~~through ~~financial~~December ~~results~~31, 2023.

In June 2016, the FASB issued Update 2016-13 Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The Company evaluated any potential impact from Update 2016-13 Financial Instruments and believes it will have no material impact on our financial results.11

13Note 3 — Commitments

~~Note 3~~Appointment ~~– Purchase~~ of ~~Intellectual~~Chief ~~Property~~Executive ~~Portfolio~~Officer

On ~~July~~January 819, ~~2023~~2024, ~~Company completed~~ the ~~purchase~~Company’s Board of aDirectors ~~portfolio~~appointed ofTeresa ~~patents~~Gallo ~~and~~as ~~trade secrets (~~the ~~“Portfolio”)~~Chief ~~from~~Executive ~~Network~~Officer ~~Foundation Technologies, LLC~~ (the “~~NIFTY~~CEO”)~~. The~~ ~~Company issued 2,000,000 shares~~ of ~~its common stock to NIFTY as consideration for~~ the ~~Portfolio~~Company. ~~The~~In ~~2,000,000~~connection ~~shares~~with ofMs. ~~common stock~~Gallo’s ofappointment ~~NYIAX~~as ~~have~~CEO, ~~various registration restrictions and provisions for~~ the ~~clawback~~position of ~~shares~~Interim byChief ~~the~~Executive ~~Company~~Officer inwas ~~certain events as set forth in the asset purchase agreement~~eliminated. ~~In 2007, a NYIAX director, Thomas F~~Ms. OGallo’~~Neill.,~~s ~~and~~primary atasks ~~NYIAX~~as ~~officer,~~CEO ~~Mark~~will ~~Grinbaum, Co-Founder~~include ~~and~~the ~~Executive~~development ~~Vice President of Financial Products, purchased approximately 0.17% (acquired for $50,000)~~ and ~~0.35%~~implementation ~~(acquired for $100,00)~~ of ~~NIFTY,~~the ~~respectively and owned these amounts as of July 8, 2023. Neither Mr. O~~Company’~~Neill~~s ~~nor~~long-term ~~Mr.~~strategic ~~Grinbaum~~plan ~~were~~for aits ~~director~~digital oradvertising ~~officer of~~exchange ~~NIFTY~~platform.

~~The~~On ~~Portfolio~~January ~~consists~~19, of2024, athe ~~portfolio~~Company entered into an employment agreement with Ms. Gallo (the “Agreement”). The term of the Agreement commenced on January 19, 2024 and continues ~~eighteen~~for two (182) ~~patents~~years unless terminated earlier pursuant to the terms of the Agreement, and ~~trade~~thereafter ~~secrets~~will be automatically renewed for successive one (1) year periods, unless terminated earlier pursuant to the terms of ~~which~~the ~~six~~Agreement ~~patents~~or ~~are~~unless ~~active.~~either ~~The~~party ~~Company~~provides ~~will~~written ~~amortize~~notice of its intention not to extend the ~~active~~term ~~patents~~of ~~over~~the ~~their useful~~Agreement ~~lives~~at upleast 30 days prior to ~~February,~~the ~~2029~~Initial Term.

~~The~~Under ~~Company~~the ~~will~~Agreement, ~~use~~Ms. ~~the~~Gallo ~~Portfolio~~will toreceive ~~enhance~~an ~~its~~annual ~~offerings~~base ~~for~~salary ~~the buying and selling~~ of ~~media~~$400,000 ~~advertising~~plus ~~audience,~~healthcare and ~~advertising~~other ~~inventory.~~benefits ~~Additionally~~including, ~~the~~but ~~Company~~not ~~will~~limited ~~use the Portfolio acquired from NIFTY~~ to ~~create new revenue streams in markets such as: (i) market data~~, ~~(ii)~~life ~~streaming~~insurance ~~media (advertising~~coverage, ~~livestreaming~~ ~~and~~expense ~~video-on-demand), and (iii) the webinar market. NYIAX engaged an intellectual property valuation company to assess the~~allowances ~~potential opportunities of the patents~~ and ~~trade secrets prior to our acquisition of the Portfolio~~indemnification.

~~The Company~~Ms. ~~has~~Gallo ~~concluded~~was ~~that~~to ~~the~~be ~~purchase~~granted ofrestricted ~~this~~stock ~~intellectual~~units with ~~property~~a ~~portfolio~~grant isdate ancash ~~acquisition~~equivalent value of an$100,000, ~~asset~~vesting ~~group~~50% inafter ~~accordance~~six ~~with ASC~~(6) ~~805-10-55~~months ~~and~~from the ~~Company~~July ~~utilized~~19, a2024, ~~$2.00~~and ~~share~~the ~~valuation~~remaining ~~based~~50% onvesting after ~~the~~one ~~Company’s~~year ~~latest~~from ~~convertible~~the ~~notes~~January ~~offering~~19, ~~the~~2025 ~~2023B Convertible~~upon ~~Notes Offering~~IPO.

AAlso, upon initial public offering of the NYIAX ~~purchase~~shares, ~~price~~Ms. Gallo is also a contingent equity grants of ~~approximately~~200,000 incentive stock options at $4.00 ~~million~~per ~~was~~share ~~recorded~~and as200,000 ofRSUs, ~~July~~both 8,with a ~~2023~~4-year ~~for~~quarterly ~~the~~vesting ~~Portfolio~~schedule.

~~The~~In ~~amortized~~the ~~cost~~event asthe Company terminates the Agreement without cause or does not renew the Agreement or Ms. Gallo terminates the Agreement for good reason, Ms. Gallo will be entitled to receive, among other severance benefits, cash payments equal to twelve (12) months base salary, continued health and medical benefits, and accelerated vesting of ~~September~~unvested 30stock equity pursuant to terms of the Agreement. In the event of termination for cause by the Company, ~~2023~~Ms. ~~was~~Gallo unearned assalary, ~~follows:~~benefits and unvested stock equity grants terminate.

Portfolio Cost	$	4,000,000
Accumulated amortization as of September 30, 2023		(297,520	)
	$	3,702,480

The Company will record amortization expense of the Portfolio as follows:

For the year ending December 31, 2023	$	595,041
For the year ending December 31, 2024		1,190,083
For the year ending December 31, 2025		958,678
For the year ending December 31, 2026		517,906
For the year ending December 31, 2027		341,598
For the year ending December 31, 2028		264,463
Thereafter		132,231
Total	$	4,000,000

Note 4 — Shareholders’ Equity

~~As of~~On ~~September~~June 30, ~~2023~~2024 and December 31, ~~2022~~2023 the authorized capital stock of 135,000,000 shares consisting of 125,000,000 shares of common stock and 10,000,000 shares of preferred stock each with a par value of $0.0001 with 15,~~561~~690,~~499~~719 and 1215,~~370~~611,~~002~~827 common shares issued and outstanding, respectively. No preferred stock has been issued.

~~On June 21,~~During ~~2023~~ the ~~Board~~six-month ofperiod ~~Directors~~ended ~~approved~~June ~~a grant of 775~~30,~~000 Restricted~~ ~~Share Units (RSU). All grants shall be effective~~2024, ~~upon~~$ ~~the~~315,562 ~~first day~~ of ~~trading~~payables ofto ~~the~~shareholder-founders ~~Company’s~~pursuant ~~common~~to ~~stock~~convertible ~~on the NASDAQ Exchange. 525~~notes,~~000~~ ofincluding ~~the RSUs were awarded to three Board nominees and 250~~interest,~~000~~ ~~RSUs~~ were ~~awarded~~converted to ~~two~~78,892 ~~officers~~common ~~of the Company~~shares.

For the periods ended ~~September~~ June 30, ~~2023~~2024 and ~~2022~~2023, the Company recorded share based compensation as follows:

	Three-Month Period				~~Nine~~Six-Month Period
	September 30,		September 30,		September 30,		September 30,
	June 30,		June 30,		June 30,		June 30,
	2023		2022		2023		2022
	2024		2023		2024		2023
Shared-Based Compensation:
Cost of Sales	$	5,288	$	115,~~740~~288	$	1710,~~455~~576	$	4812,~~842~~167
Technology and development		13,386		13,386		4026,~~158~~772		4626,~~348~~772
Sales, general and administrative		~~117~~104,~~460~~828		~~330~~130,~~142~~793		~~386~~209,~~255~~656		1268,~~642,800~~795
Total	$	~~136~~123,~~134~~502	$	~~355~~149,~~268~~467	$	~~443~~247,~~868~~004	$	1307,~~737,990~~734

1412

Note 5 — Convertible Notes Payable

Issuance of ~~2023A~~2024A Convertible Note Payable

~~On January~~The ~~10,~~Company ~~2023,~~has ~~the~~closed ~~Company~~on ~~commenced~~approximately a$1.3 ~~Convertible~~million in ~~Notes~~the ~~Offering~~2024A ~~(“2023A~~ Convertible Note Payable”) ~~pursuant~~offering toand ~~which it offered up to $500,000 of convertible notes. A total of approximately $200,000 of~~ the ~~2023A~~offering ~~Convertible~~has ~~Notes were sold~~closed.

~~The 2023A~~In ~~Convertible~~March ~~Notes~~2024, ~~convert~~Company atoffered ~~two dollars~~ (~~$2.00) per share concurrently when shares of common stock are sold to~~ the ~~public~~“ ~~in the~~2024 ~~Financing~~Convertible ~~Event~~Note ~~(defined~~Payable” ~~as declaring the registration statement effective~~offering), orfor insale ~~the~~up ~~event~~to ~~the Financing Event is not completed within eighteen (18) months from the date of the individually issued notes~~$1,200,000 ~~the Conversion Price shall be the price~~ of ~~two~~its ~~dollars~~Units ~~($2.00)~~which ~~per share~~may ~~and the conversion amount shall automatically~~ be ~~converted~~increased ~~into~~to ~~common stock of the Company at~~ $2~~.00~~,000,000 ~~per~~by ~~share on~~ the ~~Maturity~~Company, ~~Date.~~with ~~The~~each ~~annual~~unit ~~rate~~consisting of ~~return is twelve percent~~ (~~12.0%~~i) ~~per annum, which was paid as~~ a ~~Payment-in-Kind~~10% inunsecured ~~the~~convertible ~~Company’s~~promissory ~~common stock~~note ~~valued~~(each, ata ~~two~~“Note”); ~~dollars~~and (~~$2.00~~ii) ~~per~~such ~~share.~~number ~~Concurrently with the sales~~ of ~~the~~common stock ~~2023A~~purchase ~~Convertible Note Payable,~~ warrants ~~(the~~as ~~“Warrants”) were~~shall ~~issued~~be atequal ato ~~rate~~fifty ofthousand ~~one~~ (150,000) ~~Warrant~~warrants for ~~every~~each ~~ten dollars (~~$~~10)~~100,000 principal amount of ~~notes~~Notes ~~purchased.~~subscribed ~~Each Warrant shall be exercisable~~ for in athis ~~period of five (5) years at a price of $5~~Offering.~~50 per share.~~

The ~~warrants~~ ~~did~~Offering ~~not~~consists ~~contain obligations~~ of ~~the~~two-year ~~Company~~convertible notes towith ~~(i) redeem~~10% ~~the~~interest ~~warrants~~payment-in-kind ~~for~~in ~~cash or other assets, (ii) repurchase the~~ Company’s ~~equity~~common ~~shares~~stock byat ~~transferring~~two ~~assets, or~~ (~~iii~~$2.00) to ~~issue~~dollars, awhich ~~variable~~shall ~~number~~be ofpaid ~~equity~~at ~~shares~~maturity ~~and~~or inupon ~~accordance with~~conversion. ~~ASC480 Distinguishing Liabilities from Equity~~Additionally, the Company isissued ~~accounting~~with ~~for~~ the ~~conversion~~Notes, ~~feature~~warrant ~~and~~coverage at the ~~warrants~~rate asof ~~equity.~~one Inhundred ~~accordance with~~(100%) ~~ASC 480~~percent ~~written~~of ~~put~~the ~~options~~dollar ~~and warrants to issue redeemable equity securities. The relative~~ value of the ~~beneficial conversion~~ ~~features~~Note ~~and~~at ~~the~~two ~~warrants~~($2.00) ~~were~~dollars ~~recorded~~per share as ~~deferred~~the ~~debt~~strike ~~discount~~price of ~~$16,000~~the ~~and~~Warrants. ~~amortized~~The ~~over~~Warrants ~~the~~are ~~term~~for ofa ~~the~~period ~~convertible~~of ~~note~~five ~~using the~~(5) ~~effective interest method~~years.

~~The~~Upon completion of a subsequent financing where ~~outstanding~~the ~~principal~~Company ~~balance~~raises cumulative gross proceeds of at least $1,500,000 (the ~~2023A~~“Financing ~~Convertible~~Event”) the outstanding principal balance of the Notes and all accrued interest shall automatically ~~converted~~convert into ~~100,933~~such ~~shares~~securities ofunder the same terms and conditions as those securities ~~common~~purchased ~~stock~~in Financing Event. The conversion price of the ~~Company~~securities onwill ~~February~~be 7,the ~~2023,~~price ~~immediately~~per ~~prior~~share equal to the ~~Company’s~~following: ~~receipt~~the lower of (i) aneighty-five ~~effective~~(85%) ~~order~~percent of the price paid by purchasers of securities in such Financing Event or (ii) two ($2.00) dollars, but in no event less than one dollar and fifty cents ($1.50) per share. If a Financing Event shall not occur two (2) years from the ~~SEC~~final Closing ~~declaring~~of the ~~registration~~Offering, ~~statement~~the outstanding principal balance of ~~its~~the ~~initial~~Note ~~public~~and ~~offering~~the ~~effective~~accrued interest shall convert into the Company’s common stock at two ($2.00) dollars per share.

~~2023B~~The warrants were determined to be equity instruments, ~~Convertible~~as ~~Note~~they ~~Payable~~did not contain obligations of the Company to (i) redeem the warrants for cash or other assets, (ii) repurchase the Company’s equity shares by transferring assets, or (iii) to issue a variable number of equity shares. Upon adoption of ASU 2020-06 on January 1, 2024, the liability and equity components relating to the Company’s 2024A convertible notes are presented as a single liability. The relative fair value of the equity warrants issued in connection with the convertible notes was recorded as a debt discount and will be amortized over the respective terms of the convertible notes under the interest method.

~~On April~~The 3,fair ~~2023,~~value of the ~~Company~~warrants ~~commenced~~was ~~a Convertible Notes Offering (“2023B Convertible Note Payable”) pursuant to which it~~determined ~~will~~using ~~offer~~the upBlack-Scholes ~~to $2~~model,~~000,000~~ ofwith ~~convertible~~as ~~notes.~~provided below:

~~The 2023B~~● ~~Convertible~~Term ~~Notes~~— convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to the public in the Financing Event, or in the event the Financing Event is not completed within eighteen (18) months from the date of the individually issued notes, the Conversion Price shall be the price of two dollars ($2.00) per share and the conversion amount shall automatically be converted into common stock of the Company at $2.00 per share on the Maturity Date. The annual rate of return is twelve percent (12.0%) per annum, which shall be paid as a Payment-in-Kind in the Company’s common stock valued at two dollars ($2.00) per share. Concurrently with the issuance of the 2023B Convertible Notes Payable, the company issued warrants (the “Warrants”) The Warrants were issued at a rate of one half warrant issued for every $10 of notes purchased with an exercise price of four dollars ($4.00) and one half warrant issued for every $10 of notes purchased with an exercise price of two dollars ($2.00). Each Warrant shall be exercisable for a period of five ~~(5)~~ years.

~~$1,970,000 of~~● ~~2023B~~Risk-free ~~Convertible~~Interest ~~Note~~Rate ~~Payable~~— ~~were sold and the note offering was closed~~5.0%

~~The warrants~~● ~~did~~Dividend ~~not~~Rate ~~contain~~- obligations of the Company to (i) redeem the warrants for cash or other assets, (ii) repurchase the Company’s equity shares by transferring assets, or (iii) to issue a variable number of equity shares and in accordance with ASC480 Distinguishing Liabilities from Equity, the Company is accounting for the conversion feature and the warrants as equity. In accordance with ASC 480 written put options and warrants to issue redeemable equity securities.0

~~The warrants~~● ~~and~~Volatility ~~beneficial conversion option was recorded as the convertible note payable debt discount~~58. ~~The inputs for the Black-Scholes formula, were as follows:~~8%

●The ~~Term~~following —table 12illustrates ~~months~~the value of the convertible note payable as of June 30, 2024

● Risk-free Interest Rate — 4.59% - 5.25%

2023B Convertible Notes balance December 31, 2023	$	1,970,000
2024A Convertible Notes Payable Issued		1,300,000
	$	3,270,000
Deferred debt discount, representing the relative fair value of the warrants issued in connection with the notes		(497,304	)
Amortization of debt discount for six-month period ending June 30, 2024		57,727
Convertible Notes Payable, net at June 30, 2024	$	2,830,423

●The ~~Dividend~~2023B ~~Rate~~convertible 0notes discount was amortized over a period which ended December 31, 2023, based upon management’s expectation upon issuance of the timing for its initial public offering.

●On ~~Volatility~~February 751, 2024, for $1,695,000 of the $1,970,000 2023B convertible notes, holders agreed to the price of the conversion feature increasing to $4.00 per share from the $2%.00 -exercise 78price as originally issued.7 There was no change to the conversion price for the remaining $275,000 of 2023B convertible notes. The change in the conversion price represented a more than 10% change in the relative fair value of the conversion feature as a percentage of the carrying value of the convertible notes, resulting in an extinguishment and reissuance of the convertible notes to the same lender. There was no gain or loss recognized in connection with the extinguishment and there was no change to the carrying value of the convertible notes.

1513

~~The following~~Note 6 — Lease ~~table illustrates the value of the 2023B convertible note payable as of September 30, 2023:~~Termination

	2023 B
	Convertible
	Note Payable
2023B Convertible Note Payable at Issuance	$	1,970,000
(Deferred Debt Discount)		(704,975	)
		1,265,025
Amortization of debt discount for period ending September 30, 2023		704,975
Balance September 30, 2023	$	1,970,000

Effective April 16, 2024, the Company’s operating sub-lease for office space at 180 Maiden Lane, New York, NY 10005 that commenced on November 1, 2021 was terminated.

~~For the~~Note 7 — Related ~~nine months ended September 30, 2023, the company recorded interest expense from the amortization of deferred debt discount of $~~Party ~~713,681.~~Transactions

~~Note 6~~Payables ~~Related~~to ~~Party Transactions~~Shareholder-Founders

~~Convertible Note~~As ~~payable~~of –June ~~stockholder~~30, ~~founder~~2024 /certain shareholder-founders ~~related~~loaned ~~party~~the Company $100,500.

~~On September 25, 2023, Mark Grinbaum, a founder, shareholder, and service provider, agreed to loan the Company~~ $100,~~000,~~500 ~~with~~debt ~~interest accruing~~for atreimbursement ~~the annual rate~~ of ~~4%,~~certain ~~due~~expenses infrom ~~60 days, or upon trading of the Company’s common stock on the NASDAQ Exchange, whichever is sooner~~2016. On October 2630, 2023, the Company ~~and~~entered ~~Mark~~into ~~Grinbaum~~an ~~further~~agreement ~~agreed~~with ~~that~~shareholder-founders ~~upon~~whereby ~~trading of~~ the ~~Company’s~~debt ~~common~~converts ~~stock~~to ~~on the NASDAQ Exchange~~25,124 ~~the convertible notes payables to Mark Grinbaum and related interest convert to NYIAX common~~ shares atimmediately ~~$4.00~~upon ~~per share~~pricing ~~The loan was recorded as~~ of ~~September~~the ~~30,~~Company’s ~~2023~~initial ~~as a note payable – stockholder. The funds were received on October 2, 2023. The short-term loan will provide additional short-term funding for operations during completion of the~~ public offering ~~process~~.

OnDuring ~~October~~the ~~26,~~six-month ~~2023,~~period ~~Carolina~~ended ~~Abenante~~June 30, a2024 ~~founder,~~certain shareholder,-founders ~~officer~~loaned ~~and director, agreed to loan~~ the Company $~~100~~198,000, ~~with~~in ~~interest~~the ~~accruing~~form atof ~~the~~convertible ~~annual~~notes ~~rate~~($150,000) ofand ~~4%,~~an ~~due~~advance. inThese 60convertible ~~days,~~notes orpayables ~~upon~~to ~~trading~~certain ofshareholder-founders ~~the~~plus ~~Company’s~~interest automatically convert to common ~~stock~~shares onupon the ~~NASDAQ~~completion ~~Exchange,~~of ~~whichever is~~a ~~sooner.~~financing ~~Upon~~event ~~trading~~or ofwithin ~~the~~two ~~Company’s~~(2) ~~common~~months ~~stock~~from on the ~~NASDAQ~~date ~~Exchange,~~of the convertible notes ~~payables to Carolina Abenante~~at ~~and~~a ~~related~~share ~~interest~~price ~~convert~~of ~~to NYIAX common shares at~~ $4.00 per share. AsThe ~~of the date herein~~advance, ~~the~~plus ~~funds~~interest ~~have~~at ~~been~~4% ~~received.~~per ~~The~~annum ~~short-term loan~~was ~~will~~repaid ~~provide~~on ~~additional~~April ~~short-term~~10, ~~funding for operations during completion of the public offering process~~2024.

~~Forfeiture of~~Executive ~~Founders’~~Employment ~~Deferred Compensation~~Appointment

~~During September~~On May 4, ~~2023~~2024, ~~in connection with~~ the ~~closing of the~~ Company’s ~~IPO,~~appointed and ~~certain~~entered ~~NYIAX~~into ~~founders,~~an ~~owners,~~employment ~~agreed~~agreement towith ~~forfeit~~Robert ~~$367,803 of~~Ainbinder ~~deferred compensation amounts owed by NYIAX~~Jr. ~~The~~as ~~deferred~~the ~~compensation~~Director ~~arose~~of ~~from~~Development afor ~~salary~~Special ~~deferral~~Projects ~~program where each founder agreed to defer a portion~~ of ~~their~~the ~~contractual salary or contractor fees~~Company. Mr. ~~This~~Ainbinder ~~forfeiture~~is ~~represents~~ a ~~permanent~~Director ~~waiver~~ of ~~rights~~the ~~to this deferred compensation~~Company.

Mr. Ainbinder’s primary tasks as Director of Development for Special Projects include creating a successful Capital Attainment Program, working with the CEO and management to designate, identify and create new business lines for the Company, and other duties as mutually agreed to between the Mr. Ainbinder and the CEO. Mr. Ainbinder is also a Board member.

On May 4, 2024, the Company entered into an employment agreement with Mr. Ainbinder. (the (“Agreement”). The term of the Agreement commenced on May 4, 2024 and continues for a period of one (1) year or until otherwise terminated in accordance with the provisions of the Agreement. This Agreement shall automatically renew for successive four (4) month terms unless earlier terminated Under the Agreement. Mr. Ainbinder will receive an annual base salary of $225,000 plus healthcare and other benefits. During the term, in addition to the base salary, Mr. Ainbinder will be eligible for a discretionary bonus of up to 20% of base salary which may be in cash, equity compensation, or base salary increases.

Forfeiture of Deferred Compensation

As of June 30, 2024, in connection with the closing of the Company’s IPO and cash flows, certain NYIAX founders, owners, officers and employees agreed to defer $353,295 of compensation amounts, including payroll taxes, owed by NYIAX. The deferred compensation arose from a salary deferral program where each founder agreed to defer a portion of their contractual salary or contractor fees. This forfeiture represents a permanent waiver of rights to this deferred compensation.

This event was recorded as a contra-expense to selling, general and administrative expenses and a debit to accrued compensation.

Conversion of Notes

During the six-month period ended June 30, 2024, $315,562 of payables to shareholder-founders pursuant to convertible notes, including interest, were converted to 78,892 common shares.

Note 8 — Litigation and Contingencies

Investor Litigation Complaint

Investor Litigation Complaint On November 17, 2023, certain individual investors (the “Investors”) in NYIAX filed a complaint (the “Complaint”) in the United States District Court for the Southern District of New York (the “Court”) against the Company, Robert Ainbinder, Jr., a director of the Company since April 2016 and former chief executive officer from August 2019 until May 2022, Westpark Capital, Inc., and Michael Ainbinder, Robert Ainbinder Jr.’s brother. The complaint alleges, among other allegations, that the defendants, together or in their individual capacity, (i) violated Section 10(b) and Rule 10b-5 of the Exchange Act, (ii) violated Sections 206(1) and 206(2) of the Advisers Act (15 U.S.C. §§ 80b-6(1) and 80b-6(2)), (iii) committed fraud, (iv) committed negligent misrepresentation and omission, (v) breached fiduciary duties, (vi) breached contracts, (vii) breached duties of good faith and fair dealing, and (viii) committed negligence by, among other things, making material misrepresentations of fact related to plaintiffs’ investments in the Company and omitting material facts while soliciting plaintiffs’ investments in the Company.

The Investors paid $1,227,500 for 315,240 shares of common stock in various private placement offerings of the Company. $1,050,000 of the purchases were made during 2016, 2017 and 2018 for an aggregate of 277,906 shares of common stock; and $177,500 of the purchases were made during 2020, 2021 and 2022 for an aggregate of 37,334 shares of common stock. The Investors are seeking compensatory damages of $1,277,500, plus punitive damages of treble the compensatory damages, along with interest and attorney’s fees.

Additionally, the Company has certain indemnification obligations to WestPark resulting from this litigation and the various engagement letters executed with WestPark, and WestPark has given notice of indemnification to the Company.

The Company has concluded that it is not possible to assess the likelihood of a loss at this time.

The case underlying the Complaint could impede our ability to raise funds and may have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.

The Company intends to vigorously defend its positions. However, there can be no assurances that the Company’s contentions and affirmative defenses in response to claims will be successful in the Court or in arbitration.

Threatened Litigation

On March 23, 2021, the company entered into an engagement letter (the “Engagement Letter”) with Boustead Securities, an advisor to the Company for certain corporate financing transactions. The Engagement Letter provided for Initial Public Offering (“IPO”), Pre-IPO and corporate finance transaction advice and the advisor expressed its intent to enter into an underwriting agreement with the Company to act as the lead underwriter for the proposed IPO on a firm commitment basis.

The Engagement Letter terminates on the later of (i) eighteen (18) months from the date executed (March 23, 2021) or (ii) twelve months from the completion date of the IPO and the term may be extended pursuant to the engagement letter. Also, the Company agreed that the advisor shall have the right of first refusal (ROFR) for two (2) years from the consummation of a transaction or termination or expiration of the Engagement Letter to act as advisor or as joint financial advisor under at least equal economic terms to the Engagement Letter.

In accordance with the Engagement Letter, NYIAX had engaged Boustead Securities as its sole representative, underwriter and financial advisor. The Company was unable to complete the initial public offering at such time. NYIAX requested the SEC declare the offering effective. Upon the SEC approval NYIAX became a 1934 Securities Act reporting company with all the related responsibilities and costs.

On April 7, 2023, the Company received a demand letter from Boustead. Boustead claims that the Company owes or will owe Boustead approximately $1 million for commissions on funds privately raised by the Company during its engagement with Boustead and approximately $1.2 million if the Company completes an IPO with another underwriter. The Company disputes the amounts owed that have been claimed by Boustead and further is of the belief that if any commissions are due to Boustead, they would be significantly less than the amounts claimed by Boustead.

Boustead may claim that the Company owes or will owe Boustead approximately $1 million for commissions on funds privately raised by the Company during its engagement with Boustead and approximately $1.2 million if the Company completes an IPO with another underwriter.

There can be no assurance that Boustead will not initiate a lawsuit to recover the amounts it claims are owed and any such litigation could impede our ability to complete a capitalization and could negatively affect our financial condition. There can be no assurance that the Company will prevail in any lawsuit it commences against Boustead. The Company disputes the amounts owed that have been claimed by Boustead and further is of the belief that if any commissions are due to Boustead, they would be significantly less than the amounts claimed by Boustead. There is a probability that the Company and Boustead will end up in litigation over claims by Boustead against the Company and claims by the Company against Boustead. Litigation is expensive and time consuming with uncertain outcomes. The Company has concluded that it is not possible to assess the likelihood of a loss at this time.

The Company intends to vigorously defend its positions regarding the payment of any commissions to Boustead, however there can be no assurances that the Company’s contentions and affirmative defenses in response to claims by Boustead for any commissions will be successful in the event that the issue of Engagement Letter termination and the entitlement to, and amount of, commissions pursuant to the Engagement Letter are contested by Boustead in a court of law or arbitration or if the matter is otherwise settled by the Company and Boustead.

~~Goldstreet~~Note 9 — Subsequent Events

~~The~~Management has evaluated events that have occurred ~~Company’s~~subsequent ~~former~~to ~~CEO~~the isdate ~~also~~of athese ~~shareholder~~condensed financial statements and ~~Director~~has ofdetermined ~~the~~that, ~~Company~~other than those listed below, no such reportable subsequent events exist through February 14, 2025. ~~The~~Based ~~former~~upon ~~CEO~~this isreview, athe ~~co-founder~~Company ofdid anot ~~private~~identify ~~investment~~any subsequent events that would ~~fund,~~have ~~GoldStreet~~required ~~Holdings~~adjustment ~~Limited~~or ~~Partnership~~disclosure ~~(“GoldStreet”).~~in the financial statement other than noted above and below:

~~For the~~Impairment ~~nine months ended September 30, 2022, the Company recorded $10,000~~ of ~~general~~Patent ~~and administrative expenses related to GoldStreet for office space. The Company did not record any related party expenses related to GoldStreet for the nine-month period ended September 30, 2023.~~Portfolio

~~Note~~On July 8, 2023, Company completed the purchase of a 7portfolio —of ~~Threatened~~patents ~~Litigation~~and trade secrets (the “Patent Portfolio”)

OnAs ~~September~~consideration ~~20,~~for ~~2023~~the Patent Portfolio, the Company ~~entered~~issued ~~into~~2,000,000 ~~a settlement~~shares ~~agreement~~of ~~and~~its ~~release~~common ~~with~~stock ~~Boustead~~to ~~(the~~NIFTY, ~~“Boustead~~a ~~Agreement”)~~purchase toprice ~~settle~~of ~~the threatened litigation~~$4,000,000. The ~~including~~Patent ~~any~~Portfolio ~~and~~consists of ~~all~~eighteen ~~potential~~(18) ~~claims~~patents and ~~counterclaims~~trade bysecrets, ~~and~~[of ~~between~~which six of the patents were active]. The Company purchased ~~and~~these ~~Boustead~~patents ~~with~~as ~~respect~~a first step to ~~the~~investing ~~Engagement~~in ~~Letter~~and ~~dated~~developing ~~March~~expanded product offerings in the areas of (i) market 23data, ~~2021.~~(ii) ~~The~~streaming ~~Company~~media (advertising, livestreaming and ~~Boustead~~video-on-demand), ~~have~~and ~~agreed~~(iii) tothe awebinar ~~contingent~~market. The ~~mutual~~ultimate development, ~~release~~marketing and ~~waiver~~monetization of ~~claims~~these inexpanded ~~exchange~~product ~~for~~offerings awas ~~cash~~expected ~~payment~~to ~~of $515,000~~require significant investment by the Company, toincluding ~~Boustead~~the ashiring aof ~~deduction~~additional ~~from~~internal ~~the~~and ~~offering~~external ~~proceeds~~resources. ~~upon~~Further, ~~consummation~~management of the Company’s ~~IPO.~~understood ~~The~~that ~~Boustead~~time ~~Agreement~~was ~~also~~of ~~provides~~the ~~Boustead~~essence ~~that~~in ~~certain~~ultimately ~~indemnifications~~developing ~~included~~the ~~under~~new ~~Section~~products, 4taking advantage of the ~~Engagement~~market ~~Letter~~opportunities ~~continue.~~and ~~Unless~~being ~~otherwise~~able to ~~amended,~~monetize the ~~Boustead~~patents ~~Agreement~~within ~~shall~~the berespective ~~deemed~~patent ~~null~~lives. As ~~and~~such, ~~void~~contemporaneous inwith the ~~event~~purchase of the ~~Company’s~~Patent Portfolio, ~~IPO~~management isof ~~not~~the ~~consummated~~Company bycommitted ~~December~~to ~~31, 2023. If~~ the ~~settlement~~planning isand ~~finalized~~consummation ~~with~~of the ~~consummation~~first of ~~the~~a ~~Company’s~~series ~~initial~~of ~~public~~capital ~~offering,~~raises ~~the~~that would ~~Company~~be ~~does~~required ~~not~~to ~~anticipate any~~fund ~~additional~~the ~~charges~~development ~~related~~of tothese ~~this~~new ~~threatened~~products ~~litigation~~from the core Patent Portfolio.

The ~~threatened~~Company ~~litigation~~exerted ~~arose~~significant effort from ~~The~~July ~~Company~~8, 2023 ~~entering~~through ~~into~~December an26, ~~engagement~~2024, ~~letter~~ on ~~March~~a ~~23,~~public ~~2021~~offering (to raise the ~~“Engagement~~capital ~~Letter”)~~required ~~with~~to ~~Boustead~~fund ~~Securities,~~the aninitial ~~advisor~~investment needed to develop the Patent ~~Company~~Portfolio. ~~for~~Through ~~certain~~September ~~corporate~~30, ~~financing~~2024, ~~transactions.~~the ~~The~~Company ~~Engagement~~was ~~Letter~~able ~~provides~~to ~~for~~raise ~~Initial~~only ~~Public~~$2.3 ~~Offering (“IPO”)~~million, ~~Pre-IPO~~ ~~and~~most ~~corporate~~of ~~finance~~which ~~transaction~~was ~~advice~~used ~~and~~by the ~~advisor~~Company ~~expressed~~for ~~its~~working capital ~~intent~~ to ~~enter~~fund ~~into~~its ancore ~~underwriting~~operating ~~agreement~~costs. ~~with~~This ~~the Company~~level toof ~~act~~funding aswas ~~the~~insufficient, ~~lead~~and ~~underwriter~~did not provide funding for the ~~proposed~~commercialization of ~~IPO~~the onPatent aPortfolio ~~firm~~and ~~commitment~~Company’s ~~basis~~other operating costs.

~~For financing~~The ~~transactions, including IPO and pre-IPO financings, the advisor would charge the~~ Company’s ~~(i) seven~~board ~~percent (7%)~~ of ~~the gross~~directors ~~amount~~determined to beabandon ~~disbursed to~~ the ~~Company~~project ~~from each such investment transaction closing plus, (ii) a non-accountable expense allowance equal~~ to ~~one~~develop ~~percent (1%) of~~ the patent ~~gross~~portfolio, ~~amount~~as to the ~~disbursed to the~~ Company ~~from~~has ~~each~~been ~~such~~unable ~~investment transaction closing, plus (iii) warrants equal~~ to ~~seven~~raise ~~percent (7%) of~~ the ~~gross~~capital ~~amount~~required to befund ~~received by to~~ the ~~Company~~development ~~from each such investment transaction closing. The warrant exercise price is defined as the lower~~ of: ~~(1)~~ the ~~fair~~Patent ~~market~~Portfolio ~~value~~and ~~price per share of~~ the Company’s ~~common~~significantly ~~stock as~~impaired ofability ~~each~~to ~~such~~commercialize ~~financing~~and ~~closing~~monetize ~~date, (2)~~ the ~~price~~developed ~~per~~patents, ~~share~~due ~~paid~~to bynow ~~investors~~shortened intimelines ~~each~~available to ~~respective~~both ~~financing,~~raise ~~(3) in~~ the ~~event~~ ~~that~~capital ~~securities~~and ~~convertible~~to ~~are~~develop ~~sold~~the inPatent ~~the~~Portfolio ~~financing,~~before the ~~conversion~~underlying ~~price~~patents ofexpire. As such ~~securities~~, ~~or (4) in~~ the ~~event~~project ~~that~~to ~~warrants~~develop orthe ~~other~~Patent ~~rights~~Portfolio ~~are~~into ~~issued in~~ the ~~financing,~~new ~~the~~products ~~exercise~~was ~~price~~immediately ~~of such warrants or other rights~~terminated. In ~~Notwithstanding~~connection with the ~~foregoing~~project termination, ~~whatever~~ the Company determined ~~raises~~to upfully towrite off the ~~maximum~~unamortized ~~note~~book ~~offering~~value of ~~$12 million~~the ~~during~~Patent ~~its~~Portfolio ~~in-process~~as ~~private~~of ~~placement~~the ~~from~~same ~~March~~date. 24Accordingly, ~~2021~~on ~~until~~September ~~April 22~~30, ~~2021~~2024, the ~~fees~~Company ~~will~~recorded bea ~~reduced~~charge ~~to 33%~~ of ~~the~~$ ~~amounts~~2,512,396 ~~indicated~~to inrecord ~~this~~the ~~paragraph~~full ~~during~~impairment ~~this~~of ~~time~~the ~~period.~~Patent ~~The engagement letter established accountable expenses up to an aggregate of $230,000~~Portfolio.

The Engagement Letter terminated on the later of (i) eighteen (18) months from the date executed (March 23, 2021) or (ii) twelve months from the completion date of the IPO and the term may be extended pursuant to the engagement letter. Also, the Company agreed that the advisor shall have the right of first refusal (ROFR) for two (2) years from the consummation of a transaction or termination or expiration of the Engagement Letter to act as advisor or as joint financial advisor under at least equal economic terms to the Engagement Letter.

On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission (the “SEC”) was declared effective by the SEC. The Company’s financial advisor, representative and lead underwriter for the Offering was Boustead Securities LLC (“Boustead”). Boustead informed the Company of its decision not to price and consequently the Company was unable to complete the initial public offering at such time. NYIAX requested the SEC declare the offering effective. Upon the SEC approval NYIAX became a 1934 Securities Act reporting company with all the related responsibilities and costs. The Company has determined to continue to pursue an initial public offering (“IPO”) and NASDAQ listing of its securities. On April 12, 2023, the Company engaged Spartan Capital Securities, LLC, as lead underwriter, deal manager and investment banker for the Company’s IPO. However, there can be no assurance that we will be able to complete an IPO in the near future, if at all.

On April 7, 2023, the Company received a demand letter from Boustead. Boustead claims that the Company owes or will owe Boustead approximately $1 million for commissions on funds privately raised by the Company during its engagement with Boustead and approximately $1,230,000 if the Company completes an IPO with another underwriter. The Company disputes the amounts owed that have been claimed by Boustead and further is of the belief that if any commissions are due to Boustead, they would be significantly less than the amounts claimed by Boustead.

During the time the Company was engaged with Boustead with respect to the IPO, the Company raised approximately $10.0 million in private transactions. Based on the formula in the Engagement Letter, the commissions on such amount were approximately $588,000, which has been acknowledged by Boustead and is accrued in our Financial Statements as of September 30, 2023. Additionally, the Company issued Boustead 23,538 warrants to purchase NYIAX common stock at a per share exercise price of $4.00. The amounts above exclude approximately $158,000 in cash commissions and 68,950 warrants to purchase NYIAX common stock at a per share exercise price of $2.00 on 2023B Convertible Note which commenced in April 2023 for which Boustead was given a right of first refusal and did not exercise the right to participate in the 2023B Convertible Note offering.

~~In the~~Convertible ~~event~~Note that there is a determination that the Engagement Letter has not expired or that Boustead is entitled to commissions if the Company completes its initial public offering with another underwriter, we believe that the maximum amount of such commissions based on the commission formula in the Engagement Letter would be approximately $560,000 in cash commissions and 122,500 warrants to purchase NYIAX common stock at a per share exercise price of $4.00 which assumes that purchasers of the Company’s shares were investors in the prior offerings during the term of the Engagement Letter or became aware of the Company or known to the Company during twelve months following the termination or expiration of the Engagement Letter.Offerings

If2024B ~~the~~Convertible ~~settlement~~Note is not finalized with the consummation of the Company’s initial public offering, there can be no assurance that Boustead will not initiate a lawsuit to recover the amounts it claims are owed and any such litigation could impede our ability to complete an IPO and could negatively affect our financial condition. In addition, there can be no assurance that the Company would prevail in any lawsuit it commences against Boustead.Payable

~~The~~As ~~Company~~of ~~intends~~February to14, ~~vigorously~~2025, ~~defend~~the ~~its~~Company ~~positions~~closed on ~~regarding~~approximately ~~the~~$0.9 ~~payment~~million ofin ~~any~~the ~~commissions~~2024B toConvertible ~~Boustead,~~Note ~~however~~Payable ~~there~~offering. ~~can~~The beOffering noconsists ~~assurances~~of ~~that~~two-year ~~the~~convertible ~~Company’s~~notes ~~contentions~~with ~~and affirmative~~10% ~~defenses~~interest payment-in-kind ~~response~~in toCompany ~~claims~~common bystock ~~Boustead~~at ~~for~~two ~~any~~($2.00) ~~commissions~~dollars, ~~will~~which shall be ~~successful~~paid inat ~~the~~maturity ~~event~~or ~~that~~upon conversion. Additionally, the ~~issue~~Company ofissued ~~Engagement~~with ~~Letter~~the ~~termination and~~Notes, ~~the~~warrant ~~entitlement~~coverage ~~to,~~at ~~and~~the ~~amount~~rate of, ~~commissions~~one ~~pursuant~~hundred to(100%) percent of the ~~Engagement~~dollar ~~Letter~~value ~~are~~of ~~contested~~the byNote ~~Boustead~~at intwo a($2.00) dollars ~~court~~per ofshare ~~law~~as orthe ~~arbitration or~~strike ifprice of the ~~matter~~Warrants. isThe ~~otherwise~~Warrants ~~settled~~are byfor ~~the~~a ~~Company~~period ~~and~~of ~~Boustead~~five (5) years.

Upon completion of a subsequent financing where the Company raises cumulative gross proceeds of at least $1,500,000 (the “Financing Event”) the outstanding principal balance of the Notes and all accrued interest shall automatically convert into such securities under the same terms and conditions as those securities purchased in Financing Event. The conversion price of the securities will be the price per share equal to the following: the lower of (i) eighty-five (85%) percent of the price paid by purchasers of securities in such Financing Event or (ii) two ($2.00) dollars, but in no event less than one dollar and fifty cents ($1.50) per share. If a Financing Event shall not occur two (2) years from the final Closing of the Offering, the outstanding principal balance of the Note and the accrued interest shall convert into the Company’s common 8stock ~~— Subsequent~~at ~~Events~~two ($2.00) dollars per share.

~~Management has~~2025A ~~evaluated~~Convertible ~~events~~Note ~~that~~Payable have occurred subsequent to the date of these condensed financial statements and has determined that, other than those listed below, no such reportable subsequent events exist through November 14, 2023. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement other than noted above and below:Offering

~~Forfeiture~~As of February 14, 2025, the Company has closed on approximately $0.2 million in the 2025A Convertible Note Payable offering. The Offering consists of ~~Deferred~~two-year ~~Compensation~~convertible ~~Amounts~~notes with 10% interest payment-in-kind in Company common stock at two ($2.00) dollars, which shall be paid at maturity or upon conversion.

In ~~connection~~the ~~with~~event the Company ~~closing~~undergoes ofa Significant Transaction (as hereinafter defined) on or before the ~~Company’s~~Maturity ~~IPO~~Date, then the ~~interim~~outstanding principal balance ~~CEO~~of the Note and ~~certain~~all ~~NYIAX~~accrued ~~employees~~interest ~~agreed~~shall tobe ~~forfeit~~automatically converted into common stock of the Company at the lower of: (i) $~~282,650~~2.00 per share or (ii) the average closing price of ~~deferred~~the ~~compensation~~common ~~amounts~~stock ~~owed~~of bythe ~~NYIAX~~public ~~and~~company which is part of the ~~NYIAX~~Significant ~~founders,~~Transaction ~~owners,~~for the ~~agreed~~15 days immediately prior to ~~forfeit~~the anSignificant ~~additional~~Transaction ~~$99,201~~ending five trading days before the closing of the Significant Transaction. The common ~~deferred~~stock ~~compensation~~issued ~~arose~~upon ~~from~~conversion ashall ~~salary~~be ~~deferral~~subsequently ~~program~~exchanged ~~where~~or ~~those~~converted ~~people~~on ~~agreed~~the tosame ~~defer~~terms and conditions as all Company shares of common stock in connection with the Significant Transaction. A Significant Transaction shall mean any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a ~~portion~~single or series of ~~their~~related ~~contractual~~transactions ~~salary~~by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or ~~contractor~~consolidation ~~fees.~~in ~~This~~which ~~forfeiture~~the ~~represents~~Company is a ~~permanent~~party; ~~waiver~~(iii) the sale, exchange, or transfer of ~~rights~~all toor ~~this~~substantially ~~deferred~~all ~~compensation~~of the assets of the Company.

~~This event will be recorded as a contra-expense to selling, general and administrative expenses and a debit to accrued compensation.~~ Directors

~~Convertible~~On ~~Note~~May ~~payable~~1, –2024, ~~stockholder~~the Board of Directors (the “Board”) of the Company appointed Teresa Gallo, the Company’s CEO, independent Directors Bruce Cooperman, ~~founder~~Michael /Garone, ~~related~~and ~~party~~Paul Richardson as Directors of the Company. As of the date hereto, the independent Directors have not been granted equity compensation for their services. Independent Directors Bruce Cooperman and Paul Richardson resigned in December 2024.

On September 25, 2023, Mark Grinbaum, a founder, shareholder, and service provider, agreed to loan the Company $100,000, with interest accruing at the annual rate of 4%, due in 60 days, or upon trading of the Company’s common stock on the NASDAQ Exchange, whichever is sooner. On October 26, 2023, the Company and Mark Grinbaum further agreed that upon trading of the Company’s common stock on the NASDAQ Exchange, the convertible notes payables to Mark Grinbaum and related interest convert to NYIAX common shares at $4.00 per share. The funds were received on October 2, 2023. The short-term loan will provide additional short-term funding for operations during completion of the public offering process.

On October 26, 2023, Carolina Abenante, a founder, shareholder, officer and director, agreed to loan the Company $100,000, with interest accruing at the annual rate of 4%, due in 60 days, or upon trading of the Company’s common stock on the NASDAQ Exchange, whichever is sooner. Upon trading of the Company’s common stock on the NASDAQ Exchange, the convertible notes payables to Carolina Abenante and related interest convert to NYIAX common shares at $4.00 per share. The funds have been received. The short-term loan will provide additional short-term funding for operations during completion of the public offering process.

Engagement of Spartan Capital Securities, LLC

On April 12, 2023, the Company engaged Spartan Capital Securities, LLC, (“Spartan”) as lead underwriter, deal manager and investment banker for the Company’s initial public offering for a six month period. On October 6, 2023, Spartan informed the Company of its decision not to continue as lead underwriter. The Company does not expect to incur any additional expenses in connection by Spartan.

Engagement of WestPark Capital, Inc.

On October 9, 2023, the Company entered into an engagement letter agreement (the “LOE”) with WestPark Capital, Inc. (“WestPark Capital”) as exclusive lead underwriter, financial advisor, deal manager, sole book running manager, placement agent and/or investment banker for the Company’s initial public offering (the “IPO”).

For certain financing transactions, including the IPO and excluding certain pre-IPO financings, the company will pay WestPark eight percent (8%) of the gross amount to be disbursed to the Company from each such financing transaction, plus warrants to purchase the number of shares equal to ten percent (10%) of the aggregate number of securities sold in such financing transaction. The warrants will be exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing six (6) months from the effective date of such financing transaction, at a price per share equal to 125% of the public offering price per security.

The LOE terminates on the earlier of (i) six (6) months from October 9, 2023, or (ii) the final closing, if any, of the IPO, provided, however, that (i) the Company may terminate the LOE on or after the one hundred fifth (150th) day after October 9, 2023 upon thirty (30) days prior written notice to WestPark Capital, and (ii) WestPark Capital may terminate the LOE on or after the ninetieth (90th) day after October 9, 2023 upon thirty (30) days prior written notice to the Company.

There can be no assurance that we will be able to complete an initial public offering in the near future, if at all.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in ~~this~~our ~~Quarterly~~Annual Report on Form 10-QK. ~~This discussion contains forward-looking statements that involve risks and uncertainties.~~ Our actual results could differ materially from those anticipated in in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this ~~prospectus.~~Form ~~Dollars~~10-Q and in ~~tabular~~Form ~~format~~10-K for the fiscal year ended December 31, 2023. This discussion contains forward-looking statements that involve risks and uncertainties. Forward-looking statements are ~~presented~~statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,” “plans,” “intends,” “objectives,” and similar expressions, are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in ~~thousands~~any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements, except ~~per~~as required ~~share~~by ~~data~~law. When used herein, orunless the context requires otherwise, ~~indicated~~references to the “Company,” “we,” “our” and “us” refer to NYIAX, Inc.

Revenues

NYIAX’s business model is focused on the creation of a marketplace where the listing of advertising inventory, campaigns and audience can easily be sold through utilization of highly efficient buying and selling technology.

The Company enters into agreements with both the Media Buyers and Media Sellers which set out the terms of the relationship and access to the Company’s platform; the Company considers both the Media Buyers and Media Sellers to be its customers. A media buyer (“Media Buyer”) is typically an advertiser or advertising agency that buys on behalf of an advertiser. Currently, the Media Buyers do not compensate the Company for the use of the platform and other services. A media seller (“Media Seller”) is typically a publisher of content, such as, websites, mobile or desktop applications, podcast, Connected TV (also commonly defined as OTT, over-the-top, and streaming, allowing brands to reach their audience on smart TVs and Internet devices) or other. The Media Sellers compensate the Company for the use of the platform and other services.

NYIAX’s technology platform provides Media Buyers and Media Sellers a marketplace where advertising or audience campaigns are listed, bought, or sold as a durable instrument; thereafter, contract flows directly into the Blockchain for contract management, reconciliation and automation purposes as a count of record. A Blockchain is basically a distributed ledger that tracks transactions among parties, that includes the following fundamental properties applicable to every single transaction: (i) all parties agree that the transaction occurred; (ii) all parties agree on the identities of the individuals participating in the transaction; (iii) all parties agree on the time of the transaction; (iv) the details of the transaction are easy to review and not subject to dispute; and evidence of the transaction persists, unchangeable, over time. The combination of these properties of Blockchain results in a system that, by design, timestamps and records all transactions in a secure and permanent manner, and is easily auditable in the future. Moreover, the ledger is distributed across many participants in the network, and copies are simultaneously updated with every fully participating node in the ecosystem. Due to such distributed nature, the system is highly resilient to downtime. Blockchain allows for immutability, consistency, and continuity of the contracts or advertising contracts from contract formation, execution, and delivery to reconciliation.

NYIAX uses coding through smart contracts (“Smart Contracts”), which are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized Blockchain network, and therefore render transactions traceable, transparent, and irreversible. The use of Smart Contracts allows NYIAX advertising contracts to self-effectuate (reconciling through automation without human intervention), which reduces backend audit and compliance costs for three parties: NYIAX, the Media Buyer and the Media Seller. Finally, all parties to the advertising contracts have the ability to view Blockchain as it populates with the contract formation, execution, and delivery, thereby providing a complete and full audit trail of events and subsequent changes to the contract or advertising contract. To our knowledge, our current implementation of near real time compliance which is displayed to both the advertiser/agency and publisher from contract formation to reconciliation currently does not exist in the advertising industry.

NYIAX connects Media Buyers (brands, advertisers or agencies) and Media Sellers (publishers or media) to execute media advertising sales contracts. NYIAX receives a commission or fee from Media Sellers upon completion of the media advertising contract. NYIAX does not take ownership or positions of the media at any time during the process.

The Company acts as an agent for the Media Seller and is not a principal in the purchase and sale of advertising inventory, data and other add-on features.

In 2020 and 2019, to scale the NYIAX platform in a commercial environment with publishers and advertising agencies, NYIAX Media Sellers a substantially reduced transaction fees. In 2019 and 2020 NYIAX had a single Media Buyer and a single Media Seller for a single campaign. The platform was being used by these customers and NYIAX. This campaign concluded on December 31, 2020.

In the first quarter of 2021, NYIAX reviewed its offering and marketing programs, launched a sales process, and hired a sales team.

The sales team was built in 2021 and subsequently reduced in 2022 due to capital concerns.

~~Factors~~In 2023, the sales team was minimal. As of the ~~Affecting~~date ~~Our~~herein, ~~Performance~~the Company has added two people to the sales team and one other has resigned.

~~Development of~~Factors ~~the~~Affecting ~~NYIAX~~Our platform is substantially complete, although further features and user capabilities are expected to be added. NYIAX is currently monetizing the platform by building a sales infrastructure and attracting Media Buyers, Media Sellers, and business partners. A business partner is an advertising agency that represents one or more Media Buyers in acquiring media for use.Performance

~~Results~~ Development of ~~Operations~~the ~~For Three Months~~NYIAX ~~Ended~~platform ~~September~~is 30substantially complete, ~~2023~~although further features and ~~2022~~user capabilities are expected to be added. NYIAX is currently monetizing the platform by building a sales infrastructure and attracting Media Buyers, Media Sellers, and business partners. A business partner is an advertising agency that represents one or more Media Buyers in acquiring media for use.

~~(unaudited)~~NYIAX’s Revenue Drivers:

	For the
	Three-Month Period Ended
	September 30, 2023			September 30, 2022
Revenue, net	$	97,820		$	124,987
Cost of Sales		159,440			340,876
Gross Margin	$	(61,620	)	$	(215,889	)
Operating expenses
Technology and development		299,007			425,878
Selling, general and administrative		1,225,833			1,444,714
Forfeiture of founders’ deferred compensation		(367,803	)		-
Deferred offering cost write-off		177,481
Depreciation and amortization		297,825			-
Total operating expenses	$	1,632,343		$	1,870,592
Loss from operations		(1,693,964	)		(2,086,481	)
Other (income) expenses
Interest and debt expense		452,009			45,865
Total other (income) expenses	$	452,009		$	45,865
Loss before provision for income taxes	$	(2,145,972	)	$	(2,132,346	)
Net loss	$	(2,145,972	)	$	(2,132,346	)

Media Buyer — An advertiser or advertising agency that buys on behalf of an advertiser.

20Business Partner — Typically Media Buyers are represented by advertising agencies that perform media planning and buying as an agent for the Media Buyer. The number and quality of the media buyers is pivotal to our success.

~~Net~~Media Sellers — Entities ~~Revenue~~that NYIAX has signed onto the platform with a Master Services.

~~For the~~Sales ~~three~~Representatives ~~months ended September 30, 2023, compared to the three~~— ~~months ended September 30, 2022, net revenue decreased to~~The ~~$97,820~~relationships ~~from~~with ~~$124,987,~~Media ~~or $27~~Buyers,~~167~~ ~~The~~Media ~~decrease~~Sellers inand ~~revenue is related primarily to a decrease in the number of new~~ business ~~development headcount~~partners ~~pursuing~~are ~~business~~key ~~from previous quarters. Revenue is dependent upon the cumulative effort of business development employees driving revenue relationships~~ to ~~the~~NYIAX’s ~~Company~~success. The ~~Company~~quality ~~does~~and ~~not~~number ~~currently have a book~~ of ~~repeatable business and as such revenue is~~sales ~~substantially~~representatives ~~dependent~~that ~~upon~~NYIAX ~~business~~employs ~~development~~directly ~~headcount~~affects ~~driving~~its ~~relationships~~continued ~~and~~revenue ~~new transactions~~growth.

~~For the three months ended September 30, 2023, the Company was compensated for the completion of 155~~ Media ~~Contracts~~on ~~with~~Exchange — A ~~average compensation~~direct result of ~~$631~~contracts ~~per~~between Media ~~Contract.~~Buyers ~~For~~and ~~the~~Media ~~three months~~Sellers, ~~ended~~Media ~~September~~on 30Exchange, ~~2022~~as reported, is the ~~Company~~media that was ~~compensated~~bought ~~for~~and ~~the~~sold ~~completion~~on ~~of 417~~the ~~Media~~platform ~~Contracts~~via ~~with~~our ~~average~~Smart ~~compensation of $300 per Media~~ Contract., ~~The~~delivered, ~~increase~~reconciled inand ~~the~~billed ~~average compensation relates~~ to the ~~Company executing~~Media ~~more contracts at higher commission rates~~Buyer. Publishers compensate the Company at variable rates; higher commission rates resulted from a mix of publishers with higher negotiated rates. The total contract values decreased from lack of activation of several contracts with certain publishers.

~~Obtaining new~~At ~~Media Contracts is dependent on several factors~~times, ~~including~~the onMedia ~~our~~Buyer ~~new business development (sales~~ and ~~representatives)~~Media ~~team,~~Seller will ~~which~~settle ~~headcount~~the ~~has~~media ~~decreased~~cost ~~from~~outside ~~eleven~~the atNYIAX ~~December 31, 2021 to three at September 30, 2023~~Platform. ~~The~~Media ~~following~~on ~~table~~Exchange ~~compares~~includes the ~~business development~~notional ~~headcount~~amounts atof ~~quarter-end~~these ~~and the Company’s quarterly revenue~~settlements.

			Business
			Development
	Quarterly		Headcount at
	Revenue		Quarter-End
March 31,2021		-		1
September 30, 2021	$	30,084		6
September 30, 2021		81,768		9
December 31, 2021		482,047		11
March 31, 2022		485,065		13
September 30, 2022		339,423		7
September 30, 2022		124,987		3
December 31, 2022		374,830		3
March 31, 2023		138,037		3
June 30, 2023		88,977		3
September 30, 2023		97,820		3

Media Contracts — A Smart Contract between a Media Seller and Media Buyer. The Company is compensated for the execution of the Smart Contract. The compensation is variable based upon the volume of the contract, the Media Seller and other variables. A Media Contract is analogous to an insertion order whereby delivery, reconciliation and billing take place.

~~Technology~~Transaction Fees — NYIAX ~~and~~charges ~~Development~~transparent transaction fees.

For the three months ended September 30, 2023, compared to the three months ended September 30, 2022, technology and Development decreased to $299,007 from $425,878, or $126,871. The Company’s technology and development decreased due to expense reductions at the Company, including limited staffing reductions (one FTE) and reduced support from outside vendors.20

~~Technology and~~Transaction ~~development~~fees ~~consist~~are ofcharged ~~(i) Product development expenses related~~ to the ~~frontend~~Media ~~client user interface and backend systems, ongoing~~Seller ~~maintenance and operation of~~ (the ~~platform,~~publisher) ~~integrations~~for ~~with~~all ~~clients~~advertising ~~and~~transactions ~~partners~~at ~~applications,~~variable ~~including~~rates ~~not~~on ~~limited~~the togross ~~product~~amount ~~and technology~~indicated ~~team~~in ~~members and outside services. Except to~~ the ~~extent~~Order ~~that~~from ~~such~~each ~~costs~~contract. ~~are associated with software development that qualify~~The ~~for~~rates ~~capitalization, which~~ are ~~then~~independent ~~recorded~~for aseach ~~capitalized~~Media ~~software~~Seller ~~development costs;~~ and ~~(ii) Infrastructure~~vary ~~costs~~based ~~such~~on asvolume ~~AWS (Amazon Web Services) or other cloud hosting solutions, Software development tools used for the creation and ongoing management and maintenance~~ of ~~the~~media ~~NYIAX platform~~ and service levels.

21Transaction fees are billed to the Media Buyer along with the media during the reconciliation process or paid net by the Media Seller. After payment is received for the media and the transaction fee, the cost of the media is then paid to the Media Seller.

~~Selling General~~Revenue ~~and Administrative~~Build

~~For~~NYIAX ~~the~~is ~~three months~~currently ~~ended~~building ~~September~~its ~~30,~~Business Development ~~2023~~(sales ~~compared~~and torepresentatives) ~~the three months~~teams. ~~ended~~The ~~September 30~~size, ~~2022~~ramp-up ~~selling general~~ and ~~administrative~~quality ~~decreased~~of tothe $team ~~1,225,833~~are ~~from~~effected ~~$1,444,714~~by orour $liquidity ~~218,881~~and ~~primarily~~will ~~resulting~~affect ~~from~~net ~~a marked decrease in share-based compensation of approximately $212,682~~revenue.

~~Selling general~~Other ~~and~~Factors ~~administrative~~affecting ~~consists primarily of personnel costs, including salaries, bonuses, employee benefits costs and the Company~~NYIAX’s ~~sales~~ ~~and~~Net marketing personnel. Sales and marketing expense also includes costs for market development programs, promotional and other marketing activities, and costs associated with the Company’s executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, and rent.Revenue

~~Depreciation~~Identifying valuable ad impressions that we can profitably monetize at scale — We continuously review our available inventory from existing publishers across every format (mobile, desktop, digital video, Over the Top Media, CTV, and ~~Amortization~~rich media). The factors we consider to determine which impressions we process include transparency on price, counterparties to the transaction, viewability, brand integrity in regard to ad placement and whether or not the impression is human sourced (also known as fraud). By consistently applying these criteria, we believe that the ad impressions we process will be valuable and marketable to advertisers.

~~For~~Managing industry dynamics — We operate in the ~~three months~~rapidly ~~ended~~evolving ~~September~~digital ~~30,~~advertising ~~2023,~~industry. ~~depreciation~~Due to the scale and ~~amortization~~complexity ~~increased~~of the digital advertising ecosystem, direct sales via manual, person-to-person ~~$297~~processes are insufficient for delivering a real-time,~~825~~ ~~from~~personalized $0ad experience, creating the need for programmatic advertising. In turn, advances in programmatic technologies have enabled publishers to auction their ad inventory to more buyers, simultaneously, and in real time through a process referred to as header bidding. Header bidding has also provided advertisers with transparent access to ad impressions. As advertisers keep pace with ongoing changes in the way that consumers view and interact with ~~three~~digital media there will be further innovation and we anticipate that header bidding will be extended into new areas such as OTT/CTV. ~~months~~We believe ~~ended~~our ~~September~~focus 30on publishers and buyers has allowed us to understand their needs and our ongoing innovation has enabled us to quickly adapt to changes in the industry, ~~2022~~develop new solutions and do so cost effectively. Our performance depends on our ability to keep pace with industry changes such as header bidding and the evolving needs of our publishers and buyers while continuing our cost efficiency.

Seasonality — The advertising ~~depreciation~~industry ~~and~~experiences ~~amortization~~seasonal ~~resulted~~trends ~~from~~that ~~the~~affect ~~amortization~~many ofparticipants ~~the~~in ~~purchase of~~ the ~~intellectual~~digital ~~property~~advertising ~~portfolio~~ecosystem. ofMost ~~patents~~notably, ~~the~~advertisers ~~(“Portfolio”).~~have Onhistorically ~~July~~spent 8,relatively ~~2023,~~more ~~Company~~in ~~completed~~ the ~~purchase~~fourth quarter of athe ~~portfolio~~calendar ofyear ~~patents~~to ~~and~~coincide ~~trade~~with ~~secrets (~~the ~~“Portfolio”)~~holiday ~~from~~shopping ~~Network Foundation Technologies~~season, ~~LLC~~and ~~(“NIFTY”).~~relatively less ~~The~~in ~~Company~~the ~~issued~~first ~~2,000,000~~quarter. ~~shares~~We ofexpect ~~its~~seasonality ~~common~~trends ~~stock~~ to ~~NIFTY~~continue, asand ~~consideration for~~our ~~the~~ability ~~Portfolio.~~to Amanage ~~purchase~~our ~~price~~resources ofin ~~approximately~~anticipation ~~$4 million was recorded as~~ of ~~July~~these trends 8,will ~~2023~~affect ~~for~~our ~~the~~operating ~~Portfolio~~results.

The Company has concluded that the purchase of this intellectual property portfolio is an acquisition of an asset group in accordance with ASC 805-10-55 and the Company utilized a $2.00 share valuation as it was consistent with the CompanyManagement’s ~~latest convertible notes offering, the 2023B Convertible Notes Offering.~~Plans

~~Amortization capitalized~~NYIAX ~~software~~management’s ~~costs~~plans ~~of approximately $49,000~~ for ~~the~~developing operations ~~three~~and ~~months~~generating ~~ended~~substantive ~~September~~revenues ~~30, 2023~~ and ~~2022~~gross ~~was~~margins ~~classified~~will asrequire ~~cost~~the ~~of sales.~~following:

~~Forfeiture~~1. NYIAX has completed the development of ~~Founders’~~the ~~Deferred~~initial ~~Compensation~~platform.

~~During September 2023, in connection with the closing of the Company’s IPO, certain NYIAX founders and stockholders, agreed to forfeit $367,803 of deferred compensation amounts owed by NYIAX~~2. The ~~deferred~~NYIAX ~~compensation~~sales ~~arose~~team ~~from~~has abeen ~~salary~~signing ~~deferral~~up ~~program~~Media ~~where~~Sellers ~~each~~and ~~founder~~Media ~~agreed to defer a portion of their contractual salary or contractor fees~~Buyers. ~~This forfeiture represents a permanent waiver of rights to this deferred compensation.~~

~~This~~3. ~~event~~NYIAX ~~was~~expects ~~recorded~~that asbased aupon ~~contra-expense~~this plan that it would not be able to ~~selling,~~ ~~general~~realize ~~and~~substantive ~~administrative~~revenues ~~expenses~~until ~~and~~approximately aone ~~debit~~year tofrom ~~accrued~~a ~~compensation~~capital infusion.

~~Deferred~~4. ~~Offering~~NYIAX ~~Cost~~recognizes ~~Write-Off~~that its business will require substantial scale in order to achieve profitability. The Company expects that there will be substantial sales, marketing and continued engineering and development costs to generate revenue and maintain the platform. As such, the Company will need to generate revenues at scale in order to become profitable. NYIAX is estimating that it would not be profitable until at least twelve months from investing into a substantial sales team. Current estimates reflect conditions the Company expects to exist, the course of action the Company expects to take, as the current estimates incorporate internal data, historical data, and financial models, all of which are unproven.

The Company’s policy is to defer the recognition of deferred offering costs pursuant to the Codification of Staff Accounting Bulletins, Topic 5: Miscellaneous Accounting A. Expenses of Offering. Such deferred offering costs would be recorded as an offset to proceeds upon the consummation of the offering. Deferred offering costs would be charged to expense when and if it is determined that the offering will not be consummated.21

~~For~~Results ~~the~~of ~~three-month~~Operations ~~period ended September 30, 2023, the Company recorded~~For Three Months ~~$177,481~~Ended ofJune ~~deferred offering costs, which were written off during the three-month period ended September~~ 30, ~~2023~~2024 asand ~~a result of Spartan Capital Securities, LLC’s decision not to continue as lead underwriter on October 6,~~ 2023.

~~Share-Based~~The following table presents the ~~Compensation~~Company’s comparable financial results between the three month periods ending June 30, 2024 and 2023:

For the three months ended September 30, 2023 compared to the three months ended September 30, 2022 share-based compensation decreased to $136,134 from $355,268, or $219,134 due to the full vest of various new awards awarded in the three months ended September 30, 2022, partially offset by the completion of amortizing previous awards.

	Three Months
	June 30,			June 30,
	2024			2023
	(unaudited)			(unaudited)
Revenue, Net	$	83,310		$	88,978
Cost of Sales		141,708			168,223
Gross Margin	$	(58,398	)	$	(79,245	)

Operating expenses
Technology and development	$	79,977		$	288,811
Selling, general and administrative		822,203			1,583,324
Forfeiture of deferred compensation		(45,213	)		-
Depreciation and amortization		297,731			405
Total operating expenses	$	1,154,698		$	1,872,540
Loss from operations	$	(1,213,096	)	$	(1,951,785	)
Other (income) expenses
Interest expense	$	146,490		$	339,498
Total other (income) expenses	$	146,490		$	339,498
Loss before provision for income taxes	$	(1,359,586	)	$	(2,291,283	)
Net loss	$	(1,359,586	)	$	(2,291,283	)
Net loss per share – basic and diluted	$	(0.09	)	$	(0.17	)
Weighted Average O/S Shares-basic and diluted		15,690,484			13,561,499

~~For the~~Net ~~three-month periods ended September 30, 2023 and September 30, 2022, the Company classified the share-based compensation expenses on the statement of operation as follows:~~Revenue

	Three-Months Ended
	September 30, 2023		September 30, 2022
Shared-Based Compensation:
Cost of Sales	$	5,288	$	11,740
Technology and development		13,386		13,386
Sales, general and administrative		117,460		330,142
	$	136,134	$	355,268

For the three-month ended June 30, 2024, compared to the three-months ended June 30, 2023 net revenue decreased to $83,310 from $88,978, or by $5,668 (6%).

22For the three-months ended June 30, 2024, the Company was compensated for the completion of 161 Media Contracts with average compensation of $517 per Media Contract. For the three-months ended June 30, 2023, the Company was compensated for the completion of 163 Media Contracts with average compensation of $546 per Media Contract. The decrease in the average compensation relates to the Company executing contracts at lower commission rates and lower total contract value. Publishers compensate the Company at variable rates; lower commission rates resulted from a mix of publishers with lower negotiated rates. The total contract values decreased from lack of activation of several contracts with certain publishers.

The ~~share-based~~ ~~compensation~~following ~~expense~~chart ~~related~~illustrates toMedia ~~stock options and restricted stock awards which are referred to collectively as options and~~Contracts ~~awards~~completed ~~granted under the Company’s employee option plans, is measured and recognized~~ in ~~the~~each ~~financial statements based on the fair value~~ of the ~~awards~~following ~~granted.~~quarters ~~The fair value~~ of ~~each option award is estimated on the grant date using the Black-Scholes option-pricing model. The Company uses the Black-Scholes model to calculate the fair value for all options granted~~2024, ~~based~~2023 onand ~~the~~2022 ~~inputs~~with ~~relevant~~related ~~on the~~quarterly ~~date~~revenue ~~granted, such as the fair value of our shares, prevailing risk-free interest rate, risk-free interest rate, expected term at issuance, volatility,~~ and ~~dividend~~revenue ~~rate,~~per etc. The value of the portion of the award is ultimately expected to vest is recognized as expense in the statements of operations on an over the requisite service periods. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions.contract:

Interest and Debt Expense, net

	Media Contracts Completed		Quarterly Revenue		Revenue / Media Contract
Quarter Ending March 31, 2022		134	$	485,065	$	3,620
Quarter Ending June 30, 2022		249		339,423		1,363
Quarter Ending September 30, 2022		417		124,987		300
Quarter Ending December 31, 2022		316		374,830		1,186
Year Ending December 31, 2022		1,116	$	1,324,305	$	1,187

Quarter Ending March 31, 2023		170	$	138,037	$	812
Quarter Ending June 30, 2023		163		88,978		546
Quarter Ending September 30, 2023		155		97,820		631
Quarter Ending December 31, 2023		202		331,266		1,640
Year Ending December 31, 2023		690	$	656,101	$	951

Quarter Ending March 31, 2024		137	$	81,544	$	595
Quarter Ending June 30, 2024		161		83,310		517
Six Months ending June 30, 2024		298	$	164,854	$	553

For the three months ended September 30, 2023 compared to the three months ended September 30, 2022 interest and debt expense, net increased to $452,009 from $45,865 an increase of $406,144. The increase was primarily related to the issuance of the 2023B Convertible Notes Payable, partially offset by the conversion of the convertible notes payable to common shares.22

~~Provision~~Obtaining new Media Contracts is dependent on ~~for~~several ~~Income~~factors, ~~Taxes~~including on our new business development (sales and representatives) team, which headcount has decreased from 13 at March 31, 2022 to one at June 30, 2024. The Company appointed a new Company’s Chief Executive Officer on January 19, 2024. With the recent appointment of our new Chief Executive Officer, the Interim Chief Executive Officer position previously held by Mr. Hogan has been eliminated, as planned. The Interim Chief Executive Officer concentrated on business development and was classified as part of the Business Development headcount shown in the table below. During the first quarter of 2024, the New Company Chief Executive Officer spent significant time on capital raising and IPO matters and was not classified as a Business Development headcount below.

~~NYIAX, Inc.~~The isfollowing ~~taxed~~table ascompares athe ~~“C”~~business ~~Corporation~~development headcount ~~subject~~at toquarter-end ~~federal, state~~ and ~~local~~the ~~income~~Company’s ~~taxes~~quarterly revenue.

The provision for income taxes consists primarily of federal and state income taxes. Actual results may also differ from our estimates based on changes in economic conditions. Such changes could have a substantial impact on the income tax provision. We re-evaluate the judgments surrounding our estimates and make adjustments, as appropriate, each reporting period.

	Quarterly Revenue		Business Development Headcount at Quarter-End
31-Mar-22		485,065		13
30-Jun-22		339,423		7
30-Sep-22		124,987		3
31-Dec-22		374,830		3
31-Mar-23		138,037		2
30-Jun-23		88,978		2
30-Sep-23		97,820		2
31-Dec-23		331,266		2
31-Mar-24		81,544		1
30-Jun-24		83,310		1

~~Our effective~~Technology ~~tax rate differs from the U.S. federal statutory income tax rate due to state taxes, utilizations of any net operating losses, potential technology~~ and ~~development tax credits, non-deductible share-based compensation, and other differences.~~Development

For the three -months ended ~~September~~June 30, ~~2023~~2024, ~~and~~compared to the three -months ended ~~September~~June 30, ~~2022~~2023, ~~NYIAX~~technology ~~did~~and ~~not~~Development ~~have~~decreased ~~any~~to ~~income~~$79,977 ~~for tax~~from ~~purposes~~$ ~~and~~288,811, ~~therefore~~or by $208,834 no(72%). ~~current~~The ~~tax~~Company’s technology ~~liability~~and ordevelopment decreased due to general expense ~~has~~reductions ~~been~~at ~~recorded~~the inCompany, ~~these~~including ~~financial~~staffing ~~statements~~reductions. During the period, the Company suspended platform development.

AtTechnology and development consist of (i) Product ~~December~~development ~~31,~~expenses ~~2022,~~related to the ~~Company~~frontend ~~has~~client ~~available~~user ~~Federal~~interface ~~net~~and ~~operating~~backend ~~loss~~systems, ~~carryforwards~~ongoing ~~(“NOLs”),~~maintenance and operation of ~~approximately~~the ~~$23.9~~platform, integrations ~~million~~with clients and partners applications, including not limited to product and technology team members and outside services except to ~~reduce~~the ~~future~~extent ~~taxable~~that ~~income~~such ~~which~~costs doare ~~not~~associated ~~expire~~with ~~but~~software development that qualify for capitalization, which are ~~limited~~then torecorded as ~~80%~~capitalized ofsoftware ~~taxable~~development ~~income~~costs; and ~~approximately~~(ii) Infrastructure ~~$23.9~~costs ~~million~~such inas ~~multiple~~AWS (Amazon Web Services) or other cloud hosting ~~states~~solutions, Software development tools used for the ~~earliest~~creation ~~expiring~~and inongoing ~~2040~~management and maintenance of the NYIAX platform and service.

~~Non-GAAP Financial~~Selling ~~Measures~~General and Administrative

~~We report~~For ~~our~~the ~~financial~~three ~~results~~months inended ~~accordance~~June ~~with~~30, ~~GAAP. However~~2024, ~~management~~compared to ~~believes~~the ~~that~~three-months ~~Adjusted~~ended ~~EBITDA~~June 30, a2023, ~~non-GAAP~~selling ~~financial~~general ~~measure (the~~and ~~“Non-GAAP~~administrative ~~Measure”)~~costs decreased to $822,203 ~~provides~~from ~~investors~~$1,583,324, ~~with~~or ~~additional~~by ~~useful~~$761,121, (48%) ~~information~~primarily resulting from a marked decrease in ~~evaluating~~expenses ~~our~~related ~~performance~~to the Company going public, such as an annual audit and other administrative costs.

WeSelling general and administrative consists primarily ~~calculate~~of ~~Adjusted~~personnel ~~EBITDA~~costs, asincluding ~~net~~salaries, ~~loss~~bonuses, ~~adjusted~~employee tobenefits ~~exclude:~~costs ~~(1) interest~~and ~~expense~~the Company’s sales and ~~debt~~marketing personnel. Sales and marketing expense, ~~net~~also includes costs for market development programs, ~~(2) depreciation~~promotional and other marketing activities, and costs associated ~~amortization~~with the Company’s executive, ~~(3) share-based~~finance, ~~compensation~~legal, ~~expense~~human resources, compliance, and ~~(4)~~ other ~~one-time~~administrative ~~items~~personnel, as well as accounting and legal professional services fees, and rent.

~~The Non-GAAP~~Forfeiture Measures are financial measures that are not required by, or presented in accordance with GAAP. We believe that the Non-GAAP Measures, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of ~~our~~Deferred historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.Compensation

23During the three-month period ended June 30, 2024, in connection with the Company’s attempted initial public offering, certain NYIAX current and former officers, agreed to forfeit $45,213 of deferred compensation amounts owed by NYIAX, including payroll taxes. (This was in addition to the addition of $308,082 of deferred compensation amounts during the three-months ended March 31, 2024. The total founders & employees deferral forfeiture for the six-month period ended June 30, 2024 was $353,295.) The deferred compensation arose from a salary deferral program where each founder agreed to defer a portion of their contractual salary or contractor fees. This forfeiture represents a permanent waiver of rights to this deferred compensation. For the year ended December 31, 2023 certain NYIAX founders, owners, officers and employees agreed to forfeit $769,839 of deferred compensation amounts, including payroll taxes, owed by NYIAX.

The Non-GAAP Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of the Non-GAAP Measures include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA do not reflect these capital expenditures, (3) Adjusted EBITDA do not consider the impact of share-based compensation expense, which is an ongoing expense for our company and (4) Adjusted EBITDA do not reflect other non-operating expenses, including interest and debt expense. In addition, our use of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies because they may not calculate the Non-GAAP Measures in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net income (loss) and other results stated in accordance with GAAP.23

~~The following~~Depreciation ~~table presents a reconciliation of Adjusted EBITDA to net loss for the three-month period ended September 30, 2023~~ and ~~2022, the most directly comparable financial measure stated in accordance with GAAP:~~Amortization

	For the
	Three-Month Period
	Ended
	September 30, 2023			September 30, 2022
Net Loss	$	(2,145,972	)	$	(2,132,346	)
Reconciliation of Adjusted EBITDA Loss to Net Loss:		-			-
Depreciation and amortization		297,825			-
Share-based compensation		136,134			355,268
Forgiveness of stockholders of payables					(510,000	)
Forfeiture of founders’ deferred compensation		(367,803	)
Deferred offering cost write-off		177,481
Interest expense	$	452,009		$	45,865
Total Adjustments of EBITDA Loss to Net Loss	$	695,646		$	(108,867	)
Adjusted EBITDA	$	(1,450,326	)	$	(2,241,213	)

For the three-months ended June 30, 2024, compared to the three-months ended June 30, 2023 depreciation and amortization increased from $405 to $297,731. The increase was from the amortization of the Patent Portfolio.

~~Reconciling~~Amortization ofcapitalized ~~Adjusted~~software ~~EBITDA~~costs ~~Loss~~of toapproximately $49,000 ~~Net Loss~~ for the three-months ~~month period~~ ended ~~September~~June 30, ~~2023~~2024 ~~included (i) depreciation~~ and ~~amortization~~2023 ofwere ~~$297,825,~~classified ~~primarily~~as ~~depreciation and amortization of the acquired intellectual property Portfolio, (ii) share-based compensation of $136,134, (iii) forfeiture of deferred compensation of $367,803 (iv) deferred offering~~ cost ~~write-off~~ of ~~$177,481 and (v) interest expense of $452,009~~sales.

~~Reconciling of~~Impairment ~~Adjusted EBITDA Loss to Net Loss for the three month period ended September 30, 2022 included (i) share-based compensation~~ of ~~$355,268, (ii)~~Patent ~~a contra expense for the forgiveness of stockholders of payables of $510,000 and (iii) interest expense of $45,865.~~Portfolio

24On July 8, 2023, Company completed the purchase of a portfolio of patents and trade secrets (the “Patent Portfolio”)

~~Adjusted~~As consideration for the Patent Portfolio, ~~EBITDA~~the Company issued 2,000,000 shares of its common stock to NIFTY, a purchase price of $4,000,000. The Patent Portfolio consists of eighteen (18) patents and trade secrets, [of which six of the patents were active]. The Company purchased these patents as a first step to investing in and developing expanded product offerings in the areas of (i) market data, (ii) streaming media (advertising, livestreaming and video-on-demand), and (iii) the webinar market. The ultimate development, marketing and monetization of these expanded product offerings was expected to require significant investment by the Company, including the hiring of additional internal and external resources. Further, management of the Company understood that time was of the essence in ultimately developing the new products, taking advantage of the market opportunities and being able to monetize the patents within the respective patent lives. As such, contemporaneous with the purchase of the Patent Portfolio, management of the Company committed to the planning and consummation of the first of a series of capital raises that would be required to fund the development of these new products from the core Patent Portfolio.

~~For~~The ~~the~~Company ~~three~~exerted ~~months~~significant ~~ended~~effort ~~September~~from 30July 8, 2023 through December 26, ~~compared~~2024, on a public offering to raise the ~~three months~~capital ~~ended~~required to fund the initial investment needed to develop the Patent Portfolio. Through September 30, ~~2022~~2024, the ~~adjusted~~Company ~~EBITDA~~was ~~loss~~able ~~decreased~~ to ~~$1,450,326~~raise ~~from~~only $2.3 million,~~241,213,~~ ormost ~~$790,887.~~of ~~The~~which ~~decrease~~was inused ~~adjusted EBITDA~~by ~~loss~~the ~~was~~Company ~~attributed~~for toworking ~~(i)~~capital ato ~~decrease~~fund its incore ~~sales~~operating ~~and~~costs. ~~marketing~~This ~~staff~~level ~~with~~of ~~related~~funding ~~expenses~~was insufficient, ~~(ii)~~and ~~administrative~~did ~~costs~~not ~~related~~provide to funding for the ~~Company~~commercialization ~~going~~of ~~public,~~the ~~such~~Patent Portfolio asand anCompany’s ~~annual~~other ~~audit~~operating costs.

~~Results~~The Company’s board of directors determined to abandon the project to develop the patent portfolio, as the Company has been unable to raise the capital required to fund the development of ~~Operations~~the ~~For Nine Months~~Patent ~~Ended~~Portfolio and the Company’s significantly impaired ability to commercialize and monetize the developed patents, due to now shortened timelines available to both raise the capital and to develop the Patent Portfolio before the underlying patents expire. As such, the project to develop the Patent Portfolio into the new products was immediately terminated. In connection with the project termination, the Company determined to fully write off the unamortized book value of the Patent Portfolio as of the same date. Accordingly, on September 30, ~~2023~~2024, ~~and~~the ~~2022~~Company recorded a charge of $ 2,512,396 to record the full impairment of the Patent Portfolio.

~~NYIAX, Inc.~~24

~~Condensed Statements~~Share-Based ~~of Operations~~Compensation

~~(unaudited)~~For the three-months ended June 30, 2024, compared to June 30, 2023 share-based compensation decreased to $123,502 from $149,467, or by $29,965 due to full vesting of certain awards.

	For the
	Nine-Month Period Ended
	September 30, 2023			September 30, 2022
Revenue, net	$	324,835		$	949,475
Cost of Sales		550,084			886,290
Gross Margin	$	(225,249	)	$	63,185
Operating expenses
Technology and development	$	986,669		$	1,254,219
Selling, general and administrative		4,356,987			5,990,212
Deferred Costs Write off		1,026,012			-
Forfeiture of founders’ deferred compensation		(367,803	)		-
Depreciation and amortization		298,635			1,770
Total operating expenses	$	6,300,500			7,246,201
Loss from operations	$	(6,525,749	)		(7,183,016	)
Other (income) expenses
Interest and debt expense		899,489			1,217,595
Total other (income) expenses		899,489			1,217,595
Loss before provision for income taxes	$	(7,425,238	)	$	(8,400,611	)
Net loss	$	(7,425,238	)	$	(8,400,611	)

For the three-months ended June 30, 2024 and June 30, 2023, the Company classified the share-based compensation expenses on the statement of operation as follows:

Net Revenue

	Three-Month Period
	June 30, 2024		June 30, 2023
Shared-Based Compensation:
Cost of Sales	$	5,288	$	5,288
Technology and development		13,386		13,386
Sales, general and administrative		104,828		130,793
Total	$	123,502	$	149,467

~~For~~The share-based compensation expense related to ~~the~~stock ~~nine~~options ~~months~~and ~~ended~~restricted ~~September~~stock ~~30,~~awards ~~2023~~which are referred to collectively as options and awards granted under the Company’s employee option plans, ~~compared~~is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The Company uses the Black-Scholes model to calculate the ~~nine~~fair ~~months~~value ~~ended~~for ~~September~~all ~~30,~~options ~~2022~~granted, ~~net~~based ~~revenue~~on ~~decreased~~the toinputs ~~$324~~relevant on the date granted,~~835~~ ~~from~~such as the fair value of our shares, ~~$949~~prevailing risk-free interest rate,~~475~~ risk-free interest rate, orexpected ~~$624~~term at issuance,~~640~~ volatility, and dividend rate, etc. The ~~decrease~~value of inthe ~~revenue~~portion of the award is ~~related~~ultimately ~~primarily~~expected to avest ~~decreased~~is recognized as expense in the ~~number~~statements of ~~new~~operations ~~business~~on ~~development~~an ~~headcount~~over the requisite ~~pursuing~~service ~~business~~periods. ~~Revenue~~Awards isare ~~dependent~~subject ~~upon~~to ~~the~~forfeiture ~~cumulative~~until ~~effort~~vesting ofconditions ~~business~~have ~~development~~been ~~employees~~satisfied ~~driving~~under ~~revenue~~the ~~relationships~~terms to of the ~~Company~~award. ~~The~~Determining the ~~Company~~fair ~~does~~value ~~not~~of ~~currently~~stock ~~have~~options aawards ~~book~~requires ofjudgement. ~~repeatable~~The ~~business~~Company’s ~~and~~use asof ~~such~~the ~~revenue~~Black-Scholes isoption ~~substantially~~pricing ~~dependent~~model ~~upon business~~requires ~~development~~the ~~headcount~~input ~~driving~~of ~~relationships~~subjective ~~and new transactions~~assumptions.

25Interest and Debt Expense, net

For the ~~nine~~ three-months ended ~~September~~June 30, ~~2023~~2024, ~~the Company was compensated for the completion of 488 Media Contracts with average compensation~~compared ofto ~~$666 per Media Contract. For~~ the ~~nine~~ three-months ended ~~September~~June 30, ~~2022~~2023, ~~the~~interest ~~Company~~and ~~was~~debt ~~compensated~~expense, ~~for~~net decreased ~~the~~to ~~completion~~$146,490 offrom ~~800 Media~~$339,498 ~~Contracts~~a ~~with~~decrease ~~average compensation~~ of $1193,~~187 per Media Contract~~008. The decrease inis ~~the~~primarily ~~average~~interest ~~compensation~~expense ~~relates~~related to the ~~Company executing~~convertible ~~more~~notes ~~contracts~~payable atissued ain ~~lower~~2021 ~~commission rates~~ and ~~lower~~2022 ~~total~~being ~~contract~~converted ~~value.~~to ~~Publishers compensate the Company at variable rates;~~shares ~~lower~~in ~~commission~~first ~~rates~~quarter ~~resulted from a mix~~ of ~~publisher with lower negotiated rates~~2024. ~~The total contract values decreased from lack of activation of several contracts with certain publisher.~~

~~Obtaining new~~Provision ~~Media~~for ~~Contracts~~Income is dependent on several factors, including on our new business development (sales and representatives) team, which headcount has decreased from eleven at December 31, 2021 to three at September 30, 2023. The following table compares the business development headcount at quarter-end and the Company’s quarterly revenue.Taxes

	Quarterly Revenue		Business Development Headcount at Quarter-End
March 31,2021		-		1
September 30, 2021	$	30,084		6
September 30, 2021		81,768		9
December 31, 2021		482,047		11
March 31, 2022		485,065		13
September 30, 2022		339,423		7
September 30, 2022		124,987		3
December 31, 2022		374,830		3
March 31, 2023		138,037		3
June 30, 2023		88,977		3
September 30, 2023		97,820		3

NYIAX, Inc. is taxed as a “C” Corporation subject to federal, state and local income taxes.

~~Technology~~The provision for income taxes consists primarily of federal and ~~Development~~state income taxes. Actual results may also differ from our estimates based on changes in economic conditions. Such changes could have a substantial impact on the income tax provision. We re-evaluate the judgments surrounding our estimates and make adjustments, as appropriate, each reporting period.

~~For the~~Our ~~nine~~effective ~~months~~tax ~~ended~~rate ~~September~~differs ~~30,~~from ~~2023,~~the ~~compared~~U.S. federal statutory toincome ~~the~~tax ~~nine~~rate ~~months~~due ~~ended~~to ~~September~~state 30taxes, ~~2022,~~utilizations ~~technology~~of ~~and~~any ~~Development~~net ~~decreased to~~operating ~~$986~~losses,~~669~~ ~~from~~potential ~~$1,254,219, or $267,550. The Company’s~~ technology and development ~~decreased~~tax ~~due to expense reductions at the Company~~credits, ~~including~~non-deductible ~~limited~~share-based ~~staffing~~compensation, ~~reductions~~ and ~~reduced~~other ~~support from outside vendors~~differences.

~~Technology and~~For ~~development consist of (i) Product development expenses related to~~ the ~~frontend~~three-months ~~client~~ended ~~user~~June ~~interface~~30, ~~and backend systems~~2024, ~~ongoing~~June ~~maintenance and operation of the platform~~30, ~~integrations with clients and partners applications~~2023, ~~including not limited to product and technology team members and outside services. Except to~~ the ~~extent~~year ~~that~~ended ~~such~~December ~~costs~~31, ~~are associated with software development that qualify for capitalization~~2023, ~~which~~NYIAX ~~are~~did ~~then~~not ~~recorded~~have asany ~~capitalized~~income ~~software~~for ~~development~~tax ~~costs;~~purposes and ~~(ii) Infrastructure~~therefore, ~~costs~~no ~~such~~current astax ~~AWS (Amazon~~liability ~~Web Services)~~ or expense ~~other~~has ~~cloud~~been ~~hosting~~recorded ~~solutions,~~in ~~Software~~these ~~development~~financial ~~tools used for the creation and ongoing management and maintenance of the NYIAX platform and service~~statements.

~~Selling General and Administrative~~25

For the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, selling general and administrative decreased to $4,356,987 from $5,990,212, or $1,633,225, primarily resulting from a marked decrease in shareNon-~~based~~GAAP ~~compensation~~Financial ~~of approximately $1,256,541.~~Measures

~~Selling general~~We ~~and~~report ~~administrative~~our ~~consists~~financial ~~primarily~~results ofin ~~personnel costs, including salaries, bonuses, employee benefits costs and the Company’s~~accordance ~~sales~~with ~~and marketing personnel~~GAAP. However, ~~Sales~~management ~~and~~believes ~~marketing~~that ~~expense~~Adjusted ~~also includes costs for market development programs~~EBITDA, ~~promotional~~a ~~and~~non-GAAP ~~other marketing~~financial ~~activities,~~measure ~~and costs associated with~~ (the ~~Company’s~~“Non-GAAP ~~executive~~Measure”), ~~finance, legal, human resources, compliance, and other~~ ~~administrative~~provides ~~personnel,~~investors aswith ~~well~~additional asuseful ~~accounting~~information ~~and~~in ~~legal~~evaluating ~~professional~~our ~~services fees, and rent~~performance.

26We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest expense and debt expense, net, (2) depreciation and amortization, (3) share-based compensation expense, and (4) other one-time items, such as impairment losses.

~~Forfeiture~~The Non-GAAP Measures are financial measures that are not required by, or presented in accordance with GAAP. We believe that the Non-GAAP Measures, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of ~~Founders’~~our ~~Deferred~~historical ~~Compensation~~operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

~~During~~The ~~September~~Non-GAAP ~~2023~~Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in ~~connection~~isolation or as a substitute for financial information presented in accordance with GAAP. Some of the ~~closing~~ limitations of the ~~Company’s~~Non-GAAP ~~initial~~Measures ~~public~~include ~~offering,~~that ~~certain~~(1) the ~~NYIAX~~measures do ~~founders~~not properly reflect capital commitments to be paid in the future, (2) although depreciation and ~~stockholders~~amortization are non-cash charges, the ~~agreed~~underlying assets may need to ~~forfeit~~be ~~$367~~replaced and Adjusted EBITDA do not reflect these capital expenditures,~~803~~ of(3) Adjusted ~~deferred~~EBITDA ~~compensation~~do ~~amounts~~not ~~owed~~consider bythe ~~NYIAX.~~impact ~~The~~of ~~deferred~~share-based compensation ~~arose~~expense, ~~from~~which ais ~~salary~~an ~~deferral~~ongoing ~~program~~expense ~~where~~for ~~each~~our ~~founder~~company ~~agreed~~and to(4) Adjusted ~~defer~~EBITDA ado ~~portion~~not ofreflect ~~their~~other ~~contractual~~non-operating ~~salary~~expenses, orincluding ~~contractor~~interest ~~fees~~and debt expense. ~~This~~In ~~forfeiture~~addition, ~~represents~~our use of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies because they may not calculate the Non-GAAP Measures in the same manner, limiting its usefulness as a ~~permanent~~comparative ~~waiver~~measure. Because of ~~rights~~these tolimitations, ~~this~~when ~~deferred~~evaluating ~~compensation~~our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net income (loss) and other results stated in accordance with GAAP.

~~This~~The ~~event~~following ~~was~~table ~~recorded~~presents as a ~~contra-expense~~reconciliation of Adjusted EBITDA to ~~selling~~ net loss, ~~general~~the ~~and~~most ~~administrative~~directly ~~expenses~~comparable ~~and~~financial ameasure ~~debit~~stated toin ~~accrued~~accordance ~~compensation.~~with GAAP:

Deferred Offering Cost Write-off

	For the			For the
	Three-Month			Three-Month
	Period			Period
	Ended			Ended
	June 30,			June 30,
	2024			2023
Net Loss	$	(1,359,586	)	$	(2,291,283	)
(Reconciliation of Adjusted EBITDA Loss to Net Loss:
Depreciation and amortization		(297,731	)		(405	)
Forfeiture of Deferred Compensation		45,213			-
Share-based compensation		(123,502	)		(149,467	)
Interest expense		(146,490	)		(339,498	)
Total Adjustments of EBITDA Loss to Net Loss	$	(522,510	)	$	(489,370	)
Adjusted EBITDA	$	(837,076	)	$	(1,801,913	)

~~The Company’s~~Adjusted ~~policy~~EBITDA is to defer the recognition of deferred offering costs pursuant to the Codification of Staff Accounting Bulletins, Topic 5: Miscellaneous Accounting A. Expenses of Offering. Such deferred offering costs would be recorded as an offset to proceeds upon the consummation of the offering. Deferred offering costs would be charged to expense when and if it is determined that the offering will not be consummated.

~~During~~For the ~~nine~~three-months ended June 30, 2024, compared to the three-months ended ~~September~~June 30, 2023, the ~~Company~~adjusted ~~recorded~~EBITDA aloss ~~charge~~decreased ofto approximately $837,000 from approximately $1.8 million or approximately $1 million (54%). The decrease in adjusted EBITDA loss was attributed to (i) a decrease in sales and marketing staff with related expenses,~~026,012~~ (ii) administrative costs related to ~~fully~~the ~~write~~Company ~~off~~going public, such as an annual audit, and the ~~deferred~~Company ~~offering~~reducing expenses ~~costs~~overall.

As of December 31, 2022, $848,531 of deferred offering costs were recorded on the balance sheet in connection with a proposed offering. On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission was declared effective by the SEC. In March, 2023, the Company’s then current financial advisor, representative and lead underwriter for the offering, Boustead Securities LLC (“Boustead”), informed the Company of its decision not to proceed with pricing of the Company’s Offering. Boustead terminated its involvement in the offering.26

OnResults April 12, 2023, the Company engaged Spartan Capital Securities, LLC (“Spartan”), as lead underwriter, deal manager and investment banker for the Company’s initial public offering for a six-month period. On October 6, 2023, Spartan informed the Company of ~~its~~Operations ~~decision not to continue as lead underwriter.~~ For ~~the~~ Six Months ~~period~~Ended ~~ended September~~ June 30, ~~2023,~~2024 ~~the~~and ~~Company recorded $177,481 of deferred offering costs which were written off during the period ended September 30,~~ 2023~~, as a result of Spartan’s decision not to continue as lead underwriter on October 6, 2023.~~

~~Depreciation~~NYIAX, Inc. ~~and~~Condensed ~~Amortization~~Statements of Operations

For the nine months ended September 30, 2023, depreciation and amortization increased to 298,635 from $1,770 for the nine months ended September 30, 2022.

	For the			For the
	Six-Months			Six-Months
	Ended			Ended
	June 30,			June 30,
	2024			2023
	(unaudited)			(unaudited)
Revenue, net	$	164,854		$	227,015
Cost of Sales		310,568			390,644
Gross Margin	$	(145,714	)	$	(163,629	)

Operating expenses
Technology and development	$	325,046		$	687,662
Selling, general and administrative		1,813,704			3,131,154
Deferred offering cost write-off		-			848,531
Forfeiture of deferred compensation		(353,295	)		-
Depreciation and amortization		595,461			810
Total operating expenses	$	2,380,916		$	4,668,157
Loss from operations	$	(2,526,630	)	$	(4,831,786	)
Other (income) expenses
Interest expense	$	208,749		$	447,480
Total other (income) expenses	$	208,749		$	447,480
Loss before provision for income taxes	$	(2,735,379	)	$	(5,279,266	)
Net loss	$	(2,735,379	)	$	(5,279,266	)
Net loss per share – basic and diluted	$	(0.17	)	$	(0.40	)
Weighted Average O/S Shares-basic and diluted		15,667,722			13,359,305

~~The depreciation~~Net and amortization resulted primarily from the amortization of the purchase of the intellectual property portfolio of patents, the (“Portfolio”). On July 8, 2023, Company completed the purchase of a portfolio of patents and trade secrets (the “Portfolio”) from Network Foundation Technologies, LLC (“NIFTY”). The Company issued 2,000,000 shares of its common stock to NIFTY as consideration for the Portfolio. A purchase price of approximately $4 million was recorded as of July 8, 2023 for the Portfolio.Revenue

~~The Company~~For ~~has concluded that~~ the ~~purchase~~six months ofended ~~this~~June 30, ~~intellectual~~2024, compared ~~property~~to ~~portfolio~~the issix months anended ~~acquisition~~June 30, of2023, annet ~~asset~~revenue ~~group~~decreased into ~~accordance~~$ ~~with ASC~~164,854 ~~805-10-55~~from ~~and~~$227,015, ~~the~~or ~~Company utilized a~~ $262,161 (27%).00 ~~share~~The ~~valuation~~decrease in asrevenue itis ~~was~~related ~~consistent~~primarily ~~with~~to ~~the~~a ~~Company’s~~decreased ~~latest~~new ~~convertible~~business ~~notes offering,~~development ~~the~~headcount ~~2023B~~pursuing ~~Convertible Notes Offering~~business.

~~Amortization capitalized~~For ~~software~~the ~~costs~~six months ofended ~~approximately~~June 30, ~~$147~~2024,~~000~~ the Company was compensated for the ~~nine~~completion ~~months~~of ~~ended~~298 ~~September~~Media Contracts with average compensation of $553 per Media Contract. For the six months ended June 30, 2023, ~~and~~the ~~2022~~Company was ~~classified~~compensated asfor ~~cost~~the completion of 333 Media Contracts with average compensation of $682 per ~~sales~~Media Contract. The decrease in the average compensation relates to the Company executing more contracts at a lower commission rates and lower total contract value. Publishers compensate the Company at variable rates; lower commission rates resulted from a mix of publisher with lower negotiated rates. The total contract values decreased from lack of activation of several contracts with certain publisher.

Share-Based Compensation

	Media Contracts Completed		Quarterly Revenue		Revenue / Media Contract

Quarter Ending March 31, 2023		170	$	138,037	$	812
Quarter Ending June 30, 2023		163		88,978		546
Six Months ending June 30, 2023		333	$	227,015	$	682

Quarter Ending March 31, 2024		137	$	81,544	$	595
Quarter Ending June 30, 2024		161		83,310		517
Six Months ending June 30, 2024		298	$	164,854	$	553

For the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 share-based compensation decreased to $443,868 from $1,737,990, or $1,294,122 due to fully vested awards for board members, executive management and other new awards awarded in the nine months ended September 30 2022, partially offset by the completion of amortizing previous awards.27

~~For the~~Obtaining ~~nine-month~~new ~~periods~~Media ~~ended~~Contracts ~~September~~is 30dependent on several factors, ~~2023~~including on our new business development (sales and ~~September~~representatives) 30team,~~2022~~ which headcount has decreased from eleven at December 31, ~~the~~2021 ~~Company~~to ~~classified~~one ~~the~~at ~~share-based~~June 30, ~~compensation~~2024. ~~expenses~~The on following table compares the ~~statement~~business ofdevelopment ~~operation~~headcount asat ~~follows:~~quarter-end and the Company’s quarterly revenue.

	Nine Months Ended
	Quarterly Revenue		Business Development Headcount at Quarter-End
	September 30, 2023		September 30, 2022
31-Mar-22		485,065	13
Shared-Based Compensation
30-Jun-22		339,423	7
Cost of Sales	$	17,455	$	48,842
30-Sep-22		124,987	3
Technology and development		40,158		46,348
31-Dec-22		374,830	3
Sales, general and administrative		386,255		1,642,800
31-Mar-23		138,037	2
	$	443,868	$	1,737,990
30-Jun-23		88,978	2
30-Sep-23		97,820	2
31-Dec-23		331,266	2
31-Mar-24		81,544	1
30-Jun-24		83,310	1

27Technology and Development

~~The share-based~~For ~~compensation~~the ~~expense~~six ~~related~~months toended ~~stock~~June ~~options~~30, ~~and restricted stock awards which are referred to collectively as options and awards granted under the Company’s employee option plans~~2024, ~~is measured and recognized in the financial statements based on the fair~~compared ~~value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The Company uses the Black-Scholes model~~ to ~~calculate~~ the ~~fair~~six ~~value~~months ~~for~~ended ~~all~~June ~~options granted~~30, ~~based on the inputs relevant on the date granted~~2023, ~~such~~technology asand ~~the~~development ~~fair~~decreased ~~value~~to ~~of our shares~~$325,046 ~~prevailing~~from ~~risk-free interest rate~~$687, ~~risk-free interest rate~~662, ~~expected~~or ~~term at issuance~~$362, ~~volatility, and dividend rate, etc~~616. The ~~value~~Company’s technology ofand ~~the~~development ~~portion~~decreased ofdue ~~the award is ultimately expected~~ to ~~vest is recognized as~~ expense in ~~the~~reductions ~~statements~~at ~~of operations on an over~~ the ~~requisite~~Company, ~~service~~including ~~periods.~~limited ~~Awards~~staffing ~~are~~reductions ~~subject~~and toreduced ~~forfeiture until vesting conditions have~~support ~~been~~from ~~satisfied~~outside ~~under the terms of the award~~vendors. ~~Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions.~~

~~Interest~~Technology and development consist of (i) Product development expenses related to the frontend client user interface and ~~Debt~~backend ~~Expense~~systems, ~~net~~ongoing maintenance and operation of the platform, integrations with clients and partners applications, including not limited to product and technology team members and outside services. Except to the extent that such costs are associated with software development that qualify for capitalization, which are then recorded as capitalized software development costs; and (ii) Infrastructure costs such as AWS (Amazon Web Services) or other cloud hosting solutions, Software development tools used for the creation and ongoing management and maintenance of the NYIAX platform and service.

~~For the~~Selling ~~nine~~General ~~months ended September 30, 2023 compared to the nine months ended September 30, 2022 interest~~ and debt expense, net decreased to $899,489 from $1,217,595, a decrease of $318,106. The decrease was primarily related to the conversion of several convertible notes payable to common shares, partially offset by the 2023B convertible note issuance.Administrative

~~Provision~~For the six months ended June 30, 2024, compared ~~for~~to ~~Income~~the ~~Taxes~~six months ended June 30, 2023, selling general and administrative decreased to $1,813,704 from $3,131,154, or $1,317,450 (42%) resulting from a company-wide effort to eliminate costs and decrease expenses of pursing an IPO.

~~NYIAX,~~Selling general and administrative consists primarily ~~Inc~~of personnel costs, including salaries, bonuses, employee benefits costs and the Company’s sales and marketing personnel. isSales and ~~taxed~~marketing asexpense aalso ~~“C”~~includes ~~Corporation~~costs ~~subject~~for tomarket ~~federal~~development programs, ~~state~~promotional and ~~local~~other ~~income~~marketing ~~taxes~~activities, and costs associated with the Company’s executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, and rent.

~~The provision~~Deferred ~~for~~Offering ~~income~~Cost taxes consists primarily of federal and state income taxes. Actual results may also differ from our estimates based on changes in economic conditions. Such changes could have a substantial impact on the income tax provision. We reWrite-~~evaluate the judgments surrounding our estimates and make adjustments, as appropriate, each reporting period.~~off

~~Our~~The Company’s policy is to defer the recognition ~~effective~~of ~~tax~~deferred ~~rate~~offering ~~differs~~costs ~~from~~pursuant to the UCodification of Staff Accounting Bulletins, Topic 5: Miscellaneous Accounting A.S Expenses of Offering. ~~federal~~ ~~statutory~~Such ~~income~~deferred ~~tax~~offering ~~rate~~costs ~~due~~would be recorded as an offset to ~~state~~proceeds ~~taxes,~~upon ~~utilizations~~the consummation of ~~any~~the ~~net~~offering. ~~operating~~Deferred offering ~~losses,~~costs ~~potential~~would ~~technology~~be charged to expense when and ~~development~~if ~~tax~~it ~~credits,~~is ~~non-deductible~~determined ~~share-based~~that ~~compensation,~~the ~~and~~offering ~~other~~will ~~differences~~not be consummated.

For the nine months ended September 30, 2023 and the nine months ended September 30, 2022, NYIAX did not have any income for tax purposes and therefore, no current tax liability or expense has been recorded in these financial statements.28

At As of December 31, 2022, $848,531 of deferred offering costs were recorded on the balance sheet in connection with a proposed offering. On February 14, 2023, the Registration Statement on Form S-1 filed by the Company ~~has~~with ~~available~~the ~~Federal~~Securities ~~net~~and ~~operating~~Exchange ~~loss~~Commission ~~carryforwards~~was declared effective by the SEC. In March, 2023, the Company’s then current financial advisor, representative and lead underwriter for the offering, Boustead Securities LLC (“~~NOLs~~Boustead”), informed the Company of ~~approximately~~its ~~$23~~decision not to proceed with pricing of the Company’s Offering.9 ~~million~~Boustead terminated its involvement toin ~~reduce~~the ~~future~~offering. ~~taxable~~As ~~income~~such, ~~which~~during dothe ~~not~~three ~~expire~~months ~~but~~ended ~~are~~2023, ~~limited~~we torecorded ~~80%~~a charge of ~~taxable~~$848,531 ~~income~~to ~~and~~fully ~~approximately~~write ~~$23.9~~off ~~million~~the indeferred ~~multiple~~offering ~~states~~costs ~~the~~related ~~earliest~~to ~~expiring~~the inabove ~~2040~~referenced offering.

~~Non-GAAP Financial~~Depreciation ~~Measures~~and Amortization

~~We report~~For ~~our~~the ~~financial~~six ~~results~~months inended ~~accordance~~June ~~with~~30, ~~GAAP. However~~2024, ~~management~~compared to ~~believes~~the ~~that~~six ~~Adjusted~~months ~~EBITDA~~ended June 30, a2023 ~~non-GAAP~~depreciation ~~financial~~and ~~measure (the~~amortization ~~“Non-GAAP~~increased ~~Measure”)~~to $595,461 ~~provides~~from ~~investors~~$810. ~~with~~The ~~additional~~increase ~~useful~~was ~~information~~attributed into ~~evaluating~~the amortization ~~our~~of ~~performance~~the Patent Portfolio.

~~We calculate~~Amortization ~~Adjusted~~capitalized ~~EBITDA~~software ascosts ~~net~~of ~~loss~~approximately $98,000 ~~adjusted~~for tothe ~~exclude:~~six ~~(1) interest~~months ~~expense~~ended ~~and~~June ~~debt expense~~30, ~~net,~~2024 ~~(2) depreciation~~ and ~~amortization,~~ ~~(3) share-based~~2023 ~~compensation~~were ~~expense,~~classified ~~and~~as ~~(4) other~~cost ~~one-time~~of ~~items~~sales.

~~The Non~~Share-~~GAAP~~Based Measures are financial measures that are not required by, or presented in accordance with GAAP. We believe that the Non-GAAP Measures, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.Compensation

28For the six months ended June 30, 2024 compared to the six months ended June 30, 2023 share-based compensation decreased to $247,004 from $307,734 due to certain awards becoming fully vested.

~~The Non-GAAP~~For Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the ~~limitations of the Non~~six-~~GAAP~~month ~~Measures~~periods ~~include~~ended ~~that (1)~~June ~~the measures do not properly reflect capital commitments to be paid in the future~~30, ~~(2) although~~ ~~depreciation~~2024 and ~~amortization are non-cash charges~~June 30,2023, the ~~underlying~~Company ~~assets~~classified ~~may need to be replaced and Adjusted EBITDA do not reflect these capital expenditures, (3) Adjusted EBITDA do not consider~~ the ~~impact of~~ share-based compensation ~~expense, which is an ongoing expense for our company and (4) Adjusted EBITDA do not reflect other non-operating~~ expenses, ~~including~~on ~~interest and debt expense. In addition, our use of~~ the ~~Non-GAAP~~statement ~~Measures may not be comparable to similarly titled measures~~ of ~~other~~operation ~~companies because they may not calculate the Non-GAAP Measures in the same manner, limiting its usefulness~~ as a comparative measure. Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net income (loss) and other results stated in accordance with GAAP.follows:

The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP:

	Six-Month Period
	June 30, 2024		June 30, 2023
Shared-Based Compensation:
Cost of Sales	$	10,576	$	12,167
Technology and development		26,772		26,772
Sales, general and administrative		209,656		268,795
Total	$	247,004	$	307,734

	For the
	Nine-Month Period Ended
	September 30, 2023			September 30, 2022
Net Loss	$	(7,425,238	)	$	(8,400,611	)
Reconciliation of Adjusted EBITDA Loss to Net Loss:
Depreciation and amortization		446,072			149,675
Share-based compensation		443,868			1,737,990
Forgiveness of stockholders of payables		-			(510,000	)
Forfeiture of founders’ deferred compensation		(367,803	)
Deferred offering cost write-off		1,026,012
Interest expense		899,489			1,217,595
Total Adjustments of EBITDA Loss to Net Loss	$	2,447,638		$	2,595,260
Adjusted EBITDA Loss	$	(4,977,600	)	$	(5,805,351	)

The share-based compensation expense related to stock options and restricted stock awards which are referred to collectively as options and awards granted under the Company’s employee option plans, is measured and recognized in the financial statements based on the fair value of the awards granted. The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model. The Company uses the Black-Scholes model to calculate the fair value for all options granted, based on the inputs relevant on the date granted, such as the fair value of our shares, prevailing risk-free interest rate, risk-free interest rate, expected term at issuance, volatility, and dividend rate, etc. The value of the portion of the award is ultimately expected to vest is recognized as expense in the statements of operations on an over the requisite service periods. Awards are subject to forfeiture until vesting conditions have been satisfied under the terms of the award. Determining the fair value of stock options awards requires judgement. The Company’s use of the Black-Scholes option pricing model requires the input of subjective assumptions.

~~Reconciling~~Interest ~~of Adjusted EBITDA Loss to Net Loss for the nine months period ended September 30, 2023, included (i) depreciation~~ and ~~amortization~~Debt ~~of $446~~Expense,~~072,~~ primarily depreciation and amortization of the acquired intellectual property Portfolio, (ii) share-based compensation of $443,868, (iii) forfeiture of deferred compensation of $367,803, iv) deferred offering cost write-off of $1,026,012 and (v) interest expense of $899,489.net

~~Reconciling~~For ofthe ~~Adjusted~~six months ~~EBITDA~~ended ~~Loss~~June 30, ~~to Net Loss~~2024 ~~for~~compared to the ~~nine~~ six months ~~period~~ ended ~~September~~ June 30, ~~2022,~~2023 ~~included~~interest ~~(i)~~and ~~depreciation~~debt ~~and~~expense, ~~amortization~~net decreased ofto $~~149~~208,~~675~~749 ~~(ii)~~from ~~share-based~~$447,480, ~~compensation~~a decrease of $1238,~~737,990,~~731. ~~(iii)~~The adecrease ~~contra~~was ~~expense~~primarily ~~for~~related to the ~~forgiveness~~sale of ~~stockholders~~new ofconvertible ~~payables of $510~~notes,~~000~~ ~~and~~partially ~~(iv)~~offset ~~interest~~by ~~expense~~the conversion of ~~$1,217,595~~an older note.

29Provision for Income Taxes

~~Adjusted~~NYIAX, Inc. is taxed as a “C” Corporation ~~EBITDA~~subject to federal, state and local income taxes.

~~For the~~The ~~nine~~provision ~~months~~for ~~ended~~income ~~September~~taxes ~~30,~~consists ~~2023,~~primarily of ~~compared~~federal toand ~~the~~state ~~nine~~income ~~months~~taxes. ~~ended~~Actual ~~September~~results ~~30,~~may ~~2022,~~also ~~the~~differ ~~adjusted~~from ~~EBITDA~~our ~~loss~~estimates ~~decreased~~based ~~to $5,155,081from~~on ~~$5,805,351,~~changes ~~or $650,270. The decrease~~ in ~~adjusted~~economic ~~EBITDA~~conditions. ~~loss~~Such ~~was~~changes could ~~attributed~~have to a ~~decrease~~substantial inimpact ~~sales~~on ~~and~~the ~~marketing~~income ~~staff with~~tax ~~related~~provision. ~~expenses~~We ~~and~~re-evaluate ~~technology~~the ~~costs~~judgments ~~and~~surrounding ~~lower~~our ~~administrative~~estimates ~~costs~~and ~~related~~make ~~to the Company going public~~adjustments, ~~such~~ as anappropriate, ~~annual~~each ~~audit~~reporting period.

~~Cash~~Our effective tax rate differs from the U.S. federal ~~Flows~~statutory income tax rate due to state taxes, ~~Liquidity~~utilizations of any net operating losses, potential technology and ~~Capital~~development ~~Resources~~tax credits, non-deductible share-based compensation, and other differences.

~~The~~For ~~Company~~the ~~believes~~six months itended ~~does~~June 30, ~~not~~2024 and ~~have~~the ~~sufficient cash~~six months toended ~~meet~~June 30, ~~working~~2023, ~~capital~~NYIAX ~~and~~did ~~capital~~not ~~requirements~~have any income for attax ~~least~~purposes ~~twelve~~and ~~months~~therefore, ~~from~~no ~~the~~current ~~issuance~~tax ~~date~~liability or ofexpense has been recorded in these financial statements.

Historically, the Company’s liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and issuance of convertible note payable. Without a new loan or other equity support, the Company would not be able to support the current operating plans through twelve months from the issuance date of these financial statements. No assurance can be given at this time, however, as to whether we will be able to raise new equity or loan support.29

For the nine months ended September 30, 2023, the Company’s operations lost approximately $7.4 million. The Company generated negative cash flows from operations of approximately $2.8 million for the nine months ended September 30, 2023, of which approximately $2.5 million were nonNon-~~cash~~GAAP ~~expenses~~Financial ~~including approximately $849,000 related to the write-off of deferred offering costs included in net cash used in financing activities.~~Measures

AsWe ofreport ~~September~~our ~~30,~~financial ~~2023,~~results ~~NYIAX~~in ~~had total current~~accordance ~~assets~~with ~~of approximately $280~~GAAP. However,~~000~~ ofmanagement ~~which~~believes ~~approximately~~that ~~$169~~Adjusted EBITDA,~~000~~ ~~was~~a ~~cash~~non-GAAP ~~and~~financial ~~total~~measure ~~current~~(the ~~liabilities~~“Non-GAAP ~~of approximately $7.2 million~~Measure”), ofprovides ~~which~~investors ~~approximately~~with ~~$2.1~~additional ~~million~~useful ~~was~~information ~~convertible notes payable and accrued payment~~ in ~~kind~~evaluating ~~interest~~our ~~payable in the Company’s common shares~~performance.

~~For~~We ~~the~~calculate ~~nine~~Adjusted ~~months~~EBITDA ~~ended~~as ~~September~~net 30loss, ~~2023,~~adjusted ~~and~~to ~~the~~exclude: ~~nine~~(1) interest ~~months~~expense ~~ended~~and ~~September~~debt 30expense, ~~2022~~net, ~~net~~(2) depreciation ~~cash~~and ~~used~~amortization, in(3) share-based ~~operating~~compensation expense, ~~activities~~and ~~was~~(4) other $one-time 2items,~~793,551~~ ~~and~~such ~~$4,753,434,~~as ~~respectively~~impairment losses.

~~For~~The ~~the~~Non-GAAP ~~nine~~Measures ~~months~~are ~~ended~~financial ~~September~~measures ~~30,~~that are ~~2023~~not required by, ~~the~~ ~~net~~or ~~cash~~presented ~~used~~in ~~was~~accordance ~~principally~~with onGAAP. We ~~account~~believe ofthat the ~~net~~Non-GAAP ~~loss~~Measures, ofwhen ~~$7,425,238~~taken ~~less~~together ~~share-based~~with ~~compensation~~our offinancial results ~~$443~~presented in accordance with GAAP,~~868,~~ ~~deferred~~provides ~~offering~~meaningful supplemental information regarding our operating performance and facilitates ~~cost~~internal ~~write-off~~comparisons of ~~$1,026,012,~~our ~~debt~~historical ~~discount~~operating ~~amortization~~performance ~~$713,681,~~on ~~accrued~~a ~~P-I-K~~more ~~interest~~consistent ~~$185,838,~~basis ~~depreciation~~by ~~and~~excluding ~~amortization~~certain items that may not be indicative of ~~$446~~our business,~~072, bad~~ ~~debt~~results ~~expense~~of ~~$106,959,~~operations ~~partially~~or ~~offset~~outlook. byIn ~~founders~~particular, ~~forfeiture~~we ofbelieve ~~deferred~~that ~~compensation~~the use of ~~$367,803,~~the ~~decreases~~Non-GAAP inMeasures ~~accounts~~are ~~receivable~~helpful to our ofinvestors ~~$1,760,827~~as ~~and~~they ~~prepaid~~are ~~expenses~~measures used by management in assessing the health of ~~$85~~our business,~~997,~~ determining incentive compensation and anevaluating our ~~increase~~operating inperformance, ~~accounts~~as ~~payable~~well ~~and~~as ~~accrued~~for ~~expenses~~internal ofplanning ~~$238,244~~and forecasting purposes.

~~For~~The Non-GAAP Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the ~~nine~~limitations of the Non-GAAP Measures include that (1) ~~months~~the ~~ended~~measures do ~~September~~not ~~30,~~properly ~~2022,~~reflect capital commitments to be paid in the ~~net~~future, (2) although depreciation and amortization are non-cash ~~used~~charges, the ~~was~~underlying ~~principally~~assets onmay ~~account~~need ofto ~~the~~be ~~net~~replaced ~~loss~~and ofAdjusted $8EBITDA do not reflect these capital expenditures,~~400,611~~ ~~less~~(3) Adjusted EBITDA do not consider the impact of share-based compensation ofexpense, $1which is an ongoing expense for our company and (4) Adjusted EBITDA do not reflect other non-operating expenses,~~737,990,~~ including interest and debt ~~discount~~expense. ~~amortization~~In addition, our use of ~~$900,979.~~the ~~Accrued~~Non-GAAP ~~PIK~~Measures ~~Interest~~may not be comparable to similarly titled measures of ~~$316,765,~~other ~~decrease~~companies because they may not calculate the Non-GAAP Measures in ~~accounts~~the ~~receivable~~same manner, limiting its usefulness as a comparative measure. Because of $1these limitations,~~549~~ when evaluating our performance,~~366,~~ ~~partially~~you ~~offset~~should byconsider ~~decrease~~the Non-GAAP inMeasures ~~accounts~~alongside ~~payable~~other offinancial ~~$342~~measures,~~088~~ including our net income (loss) and ~~increase~~other inresults ~~prepaid~~stated ~~expenses~~in ofaccordance ~~$165,286~~with GAAP.

~~Net~~The ~~cash~~following ~~provided~~table bypresents ~~financing~~a ~~activities for the nine months~~reconciliation ~~ended~~of ~~September~~Adjusted ~~30,~~EBITDA ~~2023~~to ~~and the nine months ended September 30, 2022, were $2,170,000 and $2,201,847, respectively. For the nine months ended September 30, 2023, the~~ net ~~cash provided by financing activities was from sales of convertible notes payable of $2~~loss,~~170,000.~~ ~~For~~ the ~~nine months~~most ~~ended~~directly ~~September~~comparable ~~30,~~financial ~~2022,~~measure ~~the~~stated ~~net cash provided by financing activities was from the proceeds from sales of convertible notes payable of $1,237,400, exercise of stock warrants~~ in ~~the~~accordance ~~amount~~with ~~of $1,285,832 and partially offset by deferred offering costs of $321,385.~~GAAP:

Future capital requirements will depend on many factors, including the Company’s rate of revenue growth and its level of expenditures. Additionally, the Company is planning an initial public offering of its common stock. To the extent that the offering is not successful, or that existing capital resources, revenue growth and cash flow from operations are not sufficient to fund future activities, the Company may need to raise additional funds through equity or debt financing or curtail expenses. On October 31, 2023, NYIAX filed an amended Registration Statement on Form S-1 with plans to issue 1.875,000 shares of its common stock at a price of $4.00 per share. No assurances can be provided that any additional funding or alternative financing will be available at terms acceptable to the Company, if at all.

	Six-Month Period
	June 30,			June 30,
	2024			2023
Net Loss	$	(2,735,379	)	$	(5,279,266	)
Reconciliation of Adjusted EBITDA Loss to Net Loss:
Depreciation and amortization		(595,461	)		(810	)
Deferred offering cost write-off		-			(848,531	)
Forfeiture of deferred compensation		353,295			-
Share-based compensation		(247,004	)		(307,734	)

Interest expense		(208,749	)		(447,480	)
Total Adjustments of EBITDA Loss to Net Loss	$	(697,919	)	$	(1,604,555	)
Adjusted EBITDA	$	(2,037,460	)	$	(3,674,711	)

30Adjusted EBITDA

~~Management~~For ~~must~~the ~~evaluate~~six ~~whether~~months ~~there~~ended ~~are~~June ~~conditions~~30, 2024, compared orto ~~events~~the ~~considered~~six inmonths ended June 30, 2023, the ~~aggregate~~adjusted ~~that~~EBITDA ~~raise~~loss ~~substantial~~was ~~doubt~~essentially ~~about~~flat. ~~the~~The ~~Company’s~~decrease ~~ability~~in toadjusted ~~continue~~EBITDA asloss was attributed to (i) a ~~going~~decrease ~~concern~~in ~~within one~~sales ~~year~~and ~~after~~marketing staff with related expenses, (ii) administrative costs related to the ~~date~~Company ~~that~~going public, such as an annual audit, and the ~~financial~~Company ~~statements~~reducing ~~are~~expenses ~~issued~~overall.

Based upon the factors as discussed above, substantial doubt exists regarding the Company’s ability to continue as a going concern through twelve months from the issuance date of these the financial statements. Management has taken certain steps, and is prepared to take additional steps as deemed necessary to reduce its cash burn by curtailing certain aspects of its existing operations or limiting its expansion activities. The financial statements for the period ended September 30, 2023, do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

~~The~~Going ~~Company is also subject to certain business risks~~Concern, ~~including~~Cash ~~dependence on key employees~~Flows, ~~competition,~~Liquidity ~~market acceptance of the Company’s platform, ability to source demand from buyers of advertising inventory~~ and ~~dependence on growth to achieve its business plan.~~Capital Resources

~~During~~The ~~the~~Company ~~nine-month~~believes ~~period~~it ~~ended~~does ~~September~~not ~~30,~~have sufficient ~~2023,~~cash to meet working capital and capital requirements for at least twelve months from the ~~Company~~issuance ~~sold~~of ~~convertible~~these ~~notes~~financial ~~payable:~~statements.

~~2023A~~Historically, ~~Convertible~~the ~~Note~~Company’s ~~Payable~~liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and issuance of convertible note payable. Without a new loan or other equity support, the Company would not be able to support the current operating plans through twelve months from the issuance of these financial statements. No assurance can be given at this time, however, as to whether we will be able to raise new equity or loan support.

OnFor ~~January~~the 10six months ended June 30, ~~2023~~2024, the Company’s operations ~~commenced~~lost aapproximately ~~Convertible Notes~~$5.5 ~~Offering~~million ~~(“2023A~~which ~~Convertible~~included ~~Note~~a ~~Payable”)~~charge ~~pursuant~~of toapproximately ~~which~~$3.1 itmillion ~~offered~~form upthe toImpairment ~~$500,000~~ of ~~convertible~~the ~~notes.~~Patent ~~A total~~Portfolio ofand approximately $~~200~~475,000 of ~~the~~non-cash ~~2023A Convertible Notes have been sold~~charges.

~~Under~~As ~~the~~of ~~terms~~June 30, 2024, NYIAX had total current assets of ~~the~~approximately ~~2023A~~$705,644, ~~Convertible~~of ~~Notes~~which $595,151 million was cash and total current liabilities of approximately $9.0 million ~~offered~~of inwhich ~~the~~approximately $3.2 million was convertible notes: payable, accrued payment in kind interest payable and payables to shareholder-founders in the Company’s common shares.

●For ~~The notes convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to~~ the ~~public~~six months inended ~~the Financing Event~~June 30, or2024 and ~~in the event the Financing Event is not completed within eighteen (18) months from the date of the individually issued notes~~June 30, ~~the~~2023 ~~Conversion~~net ~~Price~~cash ~~shall~~used bein ~~the~~operating ~~reduced~~activities ~~price~~was ~~of two dollars (~~$~~2.00)~~909,863 ~~per share~~ and ~~the~~approximately ~~conversion amount shall automatically be converted into common stock of the Company at~~ $21.008 ~~per~~million, ~~share on the Maturity Date~~respectively.

●For ~~The~~the ~~outstanding~~six months ~~principal~~ended ~~balance~~June 30, 2024, the net cash used was principally on account of the ~~2023A~~net ~~Convertible~~loss ~~Notes~~of ~~and~~approximately ~~all~~$5.5 ~~accrued~~million ~~interest~~less ~~automatically~~non-cash ~~converted~~charge ~~into~~for ~~common~~the ~~stock~~impairment of the ~~Company~~patent onportfolio ~~February~~of 7approximately $3.1 million, ~~2023~~depreciation and amortization of $ 396,235, ~~immediately~~share-based ~~prior~~compensation toof ~~the~~$247,004, debt ~~Company’s~~discount ~~receipt~~amortization of an$57,727, ~~effective~~accrued ~~order~~PIK ~~from~~Interest ~~the~~of ~~SEC~~$150,748 ~~declaring~~increase ~~the~~in ~~registration~~accounts ~~statement~~receivable of ~~its~~$187,8 ~~initial~~partially ~~public~~offset ~~offering~~by decreases ~~effective~~in accounts payable of $ 822,349.

●For ~~The~~the ~~annual~~six months ~~rate~~ended ofJune 30, ~~return~~2023, the isnet ~~twelve~~cash ~~percent~~used ~~(12.0%)~~was ~~per~~principally ~~annum~~on account of the net loss of $5,279,266 ~~which~~less ~~shall~~share-based becompensation ~~paid~~of as$307,734, adebt ~~Payment~~discount amortization $321,247, accrued P-inI-~~Kind~~K interest $126,252 and depreciation, bad debt expense $106,960, deferred offering cost write-off of $848,531 and amortization $99,102, decrease in ~~the~~accounts ~~Company’s~~receivable ~~common~~of ~~stock~~$1,759,025 ~~valued~~and atan ~~two~~increase ~~dollars~~in (prepaid expenses $~~2.00)~~87,497, ~~per~~partially ~~share~~offset by decrease in accounts payable of $192,254.

●Net ~~Warrants~~cash (provided by financing activities for the ~~“Warrants”)~~six months ~~were~~ended ~~issued~~June 30, at2024 aand ~~rate~~June 30, of2023, ~~one~~were ($1),450,000 ~~Warrant~~and ~~for~~$2,170,000, ~~every~~respectively. ~~ten~~For ~~dollars~~the ~~($10)~~six months ended ~~principal~~June 30, ~~amount~~2024, ofproceeds from the sales convertible notes ~~purchased.~~payable ~~Each~~and ~~Warrant~~payables ~~shall~~to beshareholder-founders ~~exercisable~~were ~~for~~approximately a$1.3 million ~~period~~and of$198,000, ~~five~~respectively, ~~(5)~~partially ~~years~~offset atby athe ~~price~~repayment of shareholder-founders of $548,000.50 ~~per~~For ~~share.~~the ~~See~~six months ~~Subsequent~~ended June 30, ~~Events~~2023, ~~footnote~~the ~~for~~net ~~more~~cash ~~details~~provided ~~relating~~by tofinancing ~~the~~activities ~~2023A~~was ~~Convertible~~from ~~Note~~sales ~~Payable~~of convertible notes payable of $2,170,000.

~~$200,000~~Management ofmust ~~2023A~~evaluate ~~Convertible~~whether there are conditions ~~Note~~or ~~Payable~~events ~~were~~considered ~~sold~~in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

~~2023B~~Based ~~Convertible~~upon ~~Note~~the ~~Payable~~factors as discussed above, substantial doubt exists regarding the Company’s ability to continue as a going concern through twelve months from the issuance date of these the financial statements. Management has taken certain steps and is prepared to take additional steps as deemed necessary to reduce its cash burn by curtailing certain aspects of its existing operations or limiting its expansion activities. The financial statements for the period ended June 30, 2024, do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

OnThe ~~April~~Company 3,is ~~2023~~also subject to certain business risks, ~~the~~including ~~Company~~dependence ~~commenced~~on akey ~~Convertible Notes~~employees, ~~Offering~~competition, ~~(“2023B~~market ~~Convertible~~acceptance ~~Note~~of ~~Payable”)~~the ~~pursuant~~Company’s platform, ability to ~~which~~source itdemand from ~~will~~buyers ~~offer~~of upadvertising inventory and dependence on growth to ~~$2,000,000~~achieve ofits ~~convertible~~business ~~notes~~plan.

~~Under the terms of the 2023A Convertible Notes offered in the convertible notes:~~31

●During ~~The notes convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to~~ the ~~public~~six-month inperiod ~~the~~ended ~~Financing Event~~June 30, 2024 ~~or in~~ the ~~event~~Company ~~the~~sold ~~Financing~~convertible ~~Event is not completed within eighteen (18) months from the date of the individually issued~~ notes, the Conversion Price shall be the reduced price of two dollars ($2.00) per share and the conversion amount shall automatically be converted into common stock of the Company at $2.00 per share on the Maturity Date.payable:

312024A Convertible Note Payable

●The Company has closed on approximately $1.3 million in the 2024A Convertible Note Payable offering. The ~~annual~~2024A ~~rate~~Convertible Note Payable offering closed on May 28, 2024. The Offering consisted of ~~return~~two-year isconvertible ~~twelve~~notes ~~percent~~with 10% interest payment-in-kind in Company common stock at two (12$2.0%00) ~~per annum~~dollars, which shall be paid asat maturity aor ~~Payment-in-Kind~~upon inconversion. Additionally, the Company’s ~~common~~issued ~~stock~~with ~~valued~~the Notes, warrant coverage at ~~two~~the ~~dollars~~rate of one hundred (100%) percent of the dollar value of the Note at two ($2.00) dollars per share as the strike price of the Warrants. The Warrants are for a period of five (5) years.

●Upon ~~Warrants~~completion of a subsequent financing where the Company raises cumulative gross proceeds of at least $1,500,000 (the “~~Warrants~~Financing Event”) ~~were~~the ~~issued~~outstanding atprincipal abalance of ~~rate~~the ofNotes ~~one~~and ~~half~~all ~~warrant~~accrued ~~issued~~interest ~~for~~shall ~~every~~automatically ~~$10~~convert ofinto ~~Notes~~such securities under the same terms and conditions as those securities purchased ~~with~~in anFinancing ~~exercise~~Event. The conversion price of ~~four~~the ~~dollars~~securities ~~($4.00).and~~will ~~one~~be ~~half~~the ~~warrant~~price ~~issued~~per ~~for~~share ~~every~~equal ~~$10~~to the following: the lower of (i) ~~Notes~~eighty-five ~~purchased~~(85%) ~~with~~percent anof ~~exercise~~the price paid by purchasers of ~~two~~securities ~~dollars~~in such Financing Event or (ii) two ($2.00) dollars, but in no event less than one dollar and fifty cents ($1.50) ~~Each~~per ~~Warrant~~share. If a Financing Event shall benot ~~exercisable~~occur ~~for~~two a(2) ~~period~~years from the final Closing of ~~five~~the Offering, the outstanding principal balance of the Note and the accrued interest shall convert into the Company’s common stock at two (5$2.00) ~~year~~dollars per share.

~~$1,970,000~~2024B ~~of 2023B~~ Convertible Note Payable ~~were sold.~~

As of February 14, 2025, the Company has closed on approximately $0.9 million in the 2024B Convertible Note ~~payable – stockholder~~Payable offering. The Offering consists of two-year convertible notes with 10% interest payment-in-kind in Company common stock at two ($2.00) dollars, which shall be paid at maturity or upon conversion. Additionally, ~~founder~~the /Company ~~related~~issued ~~party~~with the Notes, warrant coverage at the rate of one hundred (100%) percent of the dollar value of the Note at two ($2.00) dollars per share as the strike price of the Warrants. The Warrants are for a period of five (5) years.

OnUpon ~~September~~completion ~~25 ,~~of ~~2023,~~a ~~Mark~~subsequent ~~Grinbaum,~~financing awhere ~~founder,~~the ~~shareholder,~~Company ~~and~~raises ~~service~~cumulative ~~provider,~~gross ~~agreed~~proceeds toof ~~loan~~at ~~the~~least ~~Company~~ $~~100~~1,~~000~~500,000 ~~with~~(the ~~interest~~“Financing ~~accruing~~Event”) at the ~~annual~~outstanding ~~rate~~principal balance of ~~4%,~~the ~~due in~~Notes 60and ~~days,~~all oraccrued ~~upon~~interest ~~trading~~shall ofautomatically ~~the~~convert ~~Company’s~~into ~~common~~such ~~stock~~securities onunder the ~~NASDAQ~~same ~~Exchange,~~terms ~~whichever~~and isconditions ~~sooner~~as those securities purchased in Financing Event. OnThe ~~October~~conversion ~~26,~~price ~~2023,~~of the ~~Company~~ ~~and~~securities ~~Mark~~will ~~Grinbaum~~be ~~further~~the ~~agreed~~price ~~that~~per ~~upon~~share ~~trading~~equal ofto the ~~Company’s~~following: ~~common~~the ~~stock~~lower onof (i) ~~the~~eighty-five ~~NASDAQ~~(85%) ~~Exchange,~~percent of the ~~convertible notes~~price ~~payable~~paid toby ~~Mark~~purchasers ~~Grinbaum~~of ~~and~~securities ~~related~~in ~~interest~~such ~~convert~~Financing toEvent ~~NYIAX~~or ~~common~~(ii) ~~shares~~two at ($42.00) dollars, but in no event less than one dollar and fifty cents ($1.50) per share. ~~The~~If ~~loan~~a ~~was~~Financing Event shall not ~~recorded~~occur astwo of(2) years from the final Closing ~~September~~of ~~30,~~the ~~2023~~Offering, as the ~~funds~~outstanding ~~were~~principal ~~received~~balance onof ~~October~~the 2,Note ~~2023.~~and ~~The~~the ~~short-term~~accrued ~~loan~~interest ~~will~~shall ~~provide~~convert ~~additional~~into ~~short-term~~the ~~funding~~Company’s ~~for~~common ~~operations~~stock ~~during~~at ~~completion~~two of($2.00) ~~the~~dollars ~~public~~per ~~offering process~~share.

On2025A ~~October~~Convertible ~~26,~~Note ~~2023,~~Payable Carolina Abenante, a founder, shareholder, officer and director, agreed to loan the Company $100,000, with interest accruing at the annual rate of 4%, due in 60 days, or upon trading of the Company’s common stock on the NASDAQ Exchange, whichever is sooner. Upon trading of the Company’s common stock on the NASDAQ Exchange, the convertible notes payable to Carolina Abenante and related interest convert to NYIAX common shares at $4.00 per share. The funds have been received. The short-term loan will provide additional short-term funding for operations during completion of the public offering process.Offering

As of February 14, 2025, the Company has closed on approximately $0.2 million in the 2025A Convertible Note Payable offering. The Offering consists of two-year convertible notes with 10% interest payment-in-kind in Company common stock at two ($2.00) dollars, which shall be paid at maturity or upon conversion.

In the event the Company undergoes a Significant Transaction (as hereinafter defined) on or before the Maturity Date, then the outstanding principal balance of the Note and all accrued interest shall be automatically converted into common stock of the Company at the lower of: (i) $2.00 per share or (ii) the average closing price of the common stock of the public company which is part of the Significant Transaction for the 15 days immediately prior to the Significant Transaction ending five trading days before the closing of the Significant Transaction. The common stock issued upon conversion shall be subsequently exchanged or converted on the same terms and conditions as all Company shares of common stock in connection with the Significant Transaction. A Significant Transaction shall mean any of the following with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, of the effectiveness of the design and operation of our disclosure controls and procedures.

32Based on our assessments and those criteria, management determined that our internal controls over financial reporting were not effective as of June 30, 2024, material weaknesses exist in the Company’s internal control over financial reporting and disclosures. These weaknesses are that the Company was unable to provide a timely financial reporting package in connection with the year end audits and quarterly reviews. In addition, the Company identified material weaknesses in the revenue recognition process, expense reimbursement controls as well as errors over financial reporting which required the Company to restate its condensed statement of cashflows for the periods ended March 31, 2023, and its prior years financial statements. These errors related to material adjustments over the Company’s accounting of deferred offering cost, debt discount, share-based payment awards and related disclosures. This was primarily the results of the Company’s lack of documentation of internal control in place, limited accounting personnel and lack of segregation of duties. Because of continued material weaknesses in our internal control over the completeness of contract recording and accounting personnel that lack experiences in SEC reporting regulation. Additionally, for the year ended December 31, 2023, there were material weaknesses identified in the Company’s Information Technology General Controls (“ITGCs”). The control deficiencies identified were over the design of internal controls surrounding user access security, and change management for the Company’s internally developed applications and external financial-based software used by the Company. These deficiencies were in regards to user access provisioning, terminations, user access review, change management, segregation of duties of developers and migrators. The Company’s ITGCs were not designed and not operating effectively to ensure (i) appropriate segregation of duties were in place to perform program changes and (ii) activities of individuals with access to modify data and make program changes not being appropriately monitored. These control deficiencies aggregated to a Material Weakness for Information Technology General Controls for absence and limited or no presence of compensating IT Controls that mitigate the risk associated with the IT deficiencies. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected.

Based on our assessments and those criteria, management determined that our internal controls over financial reporting were not effective as of September 30, 2023, as material weaknesses exist in the Company’s internal control over financial reporting and disclosures. These weaknesses are that the Company was unable to provide a timely financial reporting package in connection with the year end audits and quarterly reviews. In addition, the Company identified material weaknesses in the revenue recognition process, expense reimbursement controls as well as errors over financial reporting which required the Company to restate its condensed statement of cashflows for the periods ended March 31, 2023 and June 30, 2023, and its prior years financial statements. These errors related to material adjustments over the Company’s accounting of deferred offering cost, debt discount, share-based payment awards and related disclosures. This was primarily the results of the Company’s lack of documentation of internal control in place, limited accounting personnel and lack of segregation of duties. Because of continued material weaknesses in our internal control over the completeness of contract recording and accounting personnel that lack experiences in SEC reporting regulation. Additionally, for the year ended December 31, 2022, there were material weaknesses identified in the Company’s Information Technology General Controls (“ITGCs”). The control deficiencies identified were over the design of internal controls surrounding user access security, and change management for the Company’s internally developed applications and external financial-based software used by the Company. These deficiencies were in regards to user access provisioning, terminations, user access review, change management, segregation of duties of developers and migrators. The Company’s ITGCs were not designed and not operating effectively to ensure (i) appropriate segregation of duties were in place to perform program changes and (ii) activities of individuals with access to modify data and make program changes not being appropriately monitored. These control deficiencies aggregated to a Material Weakness for Information Technology General Controls for absence and limited or no presence of compensating IT Controls that mitigate the risk associated with the IT deficiencies. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected.

Changes in Internal Controls over Financial Reporting

During the ~~nine-month~~past ~~period~~year, ~~ended~~the ~~September~~Company ~~30,~~has made the ~~2023,~~following changes to improve the internal control over financial reporting and safeguarding of assets. The Company’s ~~hired~~controller resigned in December, 2022 and a new controller was hired in January of 2023. ~~following~~The ~~the~~Company ~~resignation~~instituted new approval policies for expense and payment approvals. Payment procedures now include segregation of ~~our~~duties, ~~former~~we ~~controller~~established separation of duties for cash payments; all payments require three approvals. Our travel and entertainment reimbursement (revisions of previous policies) policies have been revised. Additionally, we reviewed payments to contractors to ensure proper tax reporting and hiring practices. We reinforced policies regarding board approval over material contracts. And we will be retaining experienced accounting resources that have experience in ~~December~~SEC ~~2022~~reporting regulation after the financing event is completed.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

~~None~~There is a pending suit in the Southern District of New York instituted by plaintiffs who are shareholders of NYIAX alleging claims of violation of securities law, common law fraud and negligence. The Investors are seeking compensatory damages of $1,277,500 in addition to punitive damages, interest and attorney’s fees. NYIAX intends to vigorously dispute and defend against each and every claim by all of the plaintiffs.

Item 1A. Risk Factors

~~Item~~Risks ~~1A.~~Related ~~Cautionary~~to ~~Note~~Our ~~Regarding Forward-Looking Statements and Risk Factors~~Business

~~CAUTIONARY~~There ~~NOTE~~can ~~REGARDING~~be ~~FORWARD-LOOKING~~no ~~STATEMENTS~~guarantee that the Company will be successful in securing capital.

~~This~~The ~~prospectus~~Company ~~contains~~requires ~~“forward-looking statements,”~~additional ~~which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation~~capital. ~~Words~~The ~~such as “may,” “should,” “could,” “would,”~~Company ~~“predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “~~believes,” ~~“estimates,”~~it ~~and~~does ~~similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should~~ not ~~be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we~~ have ~~when~~sufficient ~~those~~cash ~~statements are made or management’s good faith belief as of that time with respect~~ to ~~future~~meet ~~events, and~~working ~~are~~capital ~~subject to risks~~ and ~~uncertainties~~capital ~~that~~requirements ~~could~~for ~~cause~~at ~~actual~~least ~~performance~~twelve months ~~or results to differ materially~~ from ~~those~~the ~~expressed in~~issuance orof ~~suggested~~these byfinancial ~~the forward-looking~~ statements. ~~Important factors that could cause such differences include, but are not limited to:~~

●Historically, ~~our~~the ~~current~~Company’s liquidity needs have been met by the sale of common shares, the issuance of common shares through the exercise of warrants, and ~~future~~issuance ~~capital~~of ~~requirements~~convertible note payable. Without a new loan or other equity support, the Company would not be able to support ~~our~~the ~~operations;~~current operating plans through twelve months from the issuance of these financial statements. No assurance can be given at this time, however, as to whether we will be able to raise new equity or loan support.

●For ~~our~~the ~~ability~~six-months toended ~~maintain~~June or30, ~~protect~~2024, the ~~validity~~Company’s operations lost approximately $2.7 million of ~~our~~which ~~intellectual~~approximately ~~property;~~$772,000 were non-cash expenses. For the years ended December 31, 2023 and 2022, the Company’s operations lost approximately $8.7 million and $11.1 million, respectively, of which approximately $2.8 million and $4.1 million, respectively, were non-cash expenses, net.

To enable the Company to meet immediate capital requirements until longer term requirements can be met, through February 14, 2025 the Company sold approximately $1.3 million of the 2024A Convertible Note Payable approximately $0.9 million of the 2024B Convertible Note Payable and $0.2 million of the 2025A Convertible Note Payable and all management have accepted salary deferrals.

The Company generated negative cash flows from operations of approximately $910,000 for the six-months ended June 30, 2024. The Company generated negative cash used in operating activities of approximately $3.3 million for the year ended December 31, 2023 and generated negative cash used in operating activities of approximately $5.3 million for the year ended December 31, 2022. Historically, the Company’s liquidity needs have been met by the sale of convertible notes payable, common shares, and the issuance of common shares through the exercise of warrants.

As of June 30, 2024, NYIAX had total current assets of approximately $705,644, of which approximately $595,151 was cash and total current liabilities of approximately $9.0 million, of which approximately $3.2 million were convertible notes payable, accrued interest, and Payables to shareholder-founders, all payable-in-kind of the Company’s shares. As of December 31, 2023, NYIAX had total current assets of approximately $323,000, of which approximately $55,000 was cash and total current liabilities of approximately $7.9 million, of which approximately $2.4 million was convertible notes payable, accrued interest, and payables to shareholder-founders, all payable-in-kind of the Company’s shares.

We have incurred net losses and experienced net cash outflows from operating activities. If we do not effectively manage our cash and other liquid financial assets, execute our plan to increase profitability and obtain additional financing, we may not be able to satisfy repayment requirements on our obligations.

We have historically incurred operating losses, experienced cash outflows from operations and we have accumulated deficit. Our net loss was approximately $5.5 million, including a non-cash charge of $3.1 million for the impairment of our patent portfolio, for the six-month period ending June 30, 2024, and approximately $8.7 million for the year ended December 31, 2023, $11.1 million for the year ended December 31, 2022, $13.5 million for the year ended December 31, 2021, and $6.2 million for the year ended December 31, 2020.

As of June 30, 2024, the Company had negative working capital of approximately $8.3 million, including approximately $3.2 million were convertible notes payable, accrued interest, and note payable, stockholder, all payable-in-kind of the Company’s shares.

●As ~~our~~of ~~ability~~December to31, ~~attract~~2023, the Company had negative working capital of approximately $7.6 million including approximately $2.4 million were convertible notes payable, accrued interest, and note ~~retain~~payable, ~~key~~stockholder, ~~executive~~all ~~members;~~payable-in-kind of the Company’s shares.

●The ~~our~~Company ~~ability~~has also been historically reliant on sales of debt or equity securities to ~~attract~~fund its working capital obligations. As a result, the Company is of the opinion that it will not have sufficient cash to meet working capital and ~~staff~~capital ~~members;~~requirements for at least twelve months from the date of this prospectus unless it is able to raise additional capital. Management has implemented various efforts to improve liquidity and conserve cash, including the sale of convertible notes and reducing staffing levels. Because we are not yet producing sufficient revenue to sustain our operating costs, we are dependent upon raising capital to continue our business.

●If ~~our~~we ~~ability~~are unable to ~~hire~~raise additional capital, increase revenue and ~~continue~~reduce operating expenses we may not be able to ~~hire~~continue ~~qualified~~as ~~personnel;~~a going concern.

●We ~~our~~will ~~ability~~not be able to ~~maintain~~execute ~~and~~our ~~continue~~business plan ~~acceptance~~or ~~within~~stay ~~the~~in ~~advertisement~~business ~~and~~without ~~technology~~additional ~~industry;~~or adequate funding.

●Our ability to successfully develop our business, generate operating revenues and achieve profitability will depend upon our ability to ~~monetize~~obtain the necessary or adequate financing to implement our ~~intellectual~~business ~~property~~plan. (We will require financing through the issuance of additional debt and/or equity to implement our business plan, including identifying, ~~patents~~acquiring ~~developed~~and ~~with~~distributing ~~Nasdaq~~consumer products, building inventory, hiring additional personnel as needed and ~~purchased~~eventually establishing profitable operations. Such financing may not be forthcoming. As has been widely reported, global and domestic financial markets and economic conditions have been, and continue to be, disrupted and volatile due to a variety of factors, including, but not limited to, economic conditions caused by the COVID-19 pandemic. As a result, the cost of raising money in the debt and equity capital markets may increase while the availability of funds from ~~Nifty);~~those markets could diminished significantly, even more so for smaller companies like ours. If such conditions and constraints exist, we may not be able to acquire funds either through credit markets or through equity markets and, even if financing is available, it may not be available on terms which we find favorable. Failure to secure funding when needed will have an adverse effect on our ability to meet our obligations and remain in business.

●We ~~competitors~~may be subject to litigation from time to time during the normal course of business, which may adversely affect our business, financial condition and ~~competition;~~results of operations.

●Currently, ~~technology~~WestPark, ~~development~~the Company, and ~~maintain~~one ~~high~~of our ~~standards~~directors ofare ~~technology~~named ~~development;~~defendants in a pending U.S. District Court case, which could have a negative effect on us or on our business.

●On ~~our~~November ~~cash~~17, on2023, ~~hand~~certain individual investors in NYIAX filed a complaint in the United States District Court for the Southern District of New York (the “Complaint”) against Westpark Capital, Inc., the Company, Robert Ainbinder, Jr., a director of the Company since April 2016, and ~~continued~~Robert ~~investment;~~Ainbinder, Jr.’s brother. The case underlying the Complaint was earlier the subject of a FINRA arbitration case, without NYIAX as a party to the FINRA arbitration case, subsequently withdrawn and filed in the United States District Court for the Southern District of New York.

●The Company has concluded that it is not possible to assess the ~~accuracy~~likelihood of a loss at this time. The case underlying the Complaint could impede our ~~estimates~~ability ~~regarding~~to ~~expenses~~raise funds and ~~capital~~may ~~requirements;~~have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows. The Company intends to vigorously defend its positions. However, there can be no assurances that the Company’s contentions and affirmative defenses in response to claims will be successful in the Court or in arbitration. A copy of the Complaint will be sent to any investor free of charge upon e-mail request to the Company at info@nyiax.com.

●The ~~our~~Former ~~technology~~Underwriter ~~relationship~~may ~~with~~initiate ~~Nasdaq;~~a lawsuit to recover amounts it claims are owed pursuant to its engagement by the Company and the Company may initiate litigation against the Former Underwriter.

●The ~~regulation~~Former Underwriter claims that the Company owes or will owe the Former Underwriter approximately $1 million for commissions on funds privately raised by the Company during its engagement with the Former Underwriter and approximately $1.2 million if the Company completes an IPO with another underwriter.

~~Moreover,~~The ~~new~~Former ~~risks~~Underwriter ~~regularly~~may ~~emerge and it is~~continue ~~not possible for our management~~ to ~~predict~~claim orthat ~~articulate all risks we face, nor can we assess~~ the ~~impact~~Company ofowes ~~all~~or ~~risks~~will onowe ~~our business or~~ the ~~extent~~Former toUnderwriter ~~which~~approximately ~~any~~$1 ~~risk,~~million orfor ~~combination~~commissions ~~of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this prospectus are based~~ on ~~information~~funds ~~available~~privately toraised ~~us on~~ by the ~~date~~Company ofduring ~~this~~its ~~prospectus. Except~~engagement towith the ~~extent~~Former ~~required~~Underwriter byand ~~applicable~~approximately ~~laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise~~$1.2 ~~All~~million ~~subsequent~~if ~~written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by~~ the ~~cautionary~~Company ~~statements~~completes ~~contained~~an ~~above and~~IPO ~~throughout~~with ~~this prospectus~~another underwriter.

~~Risk~~There ~~Factors~~can be no assurance that the Former Underwriter will not initiate a lawsuit to recover the amounts it claims are owed and any such litigation could impede our ability to complete an IPO and could negatively affect our financial condition. There can be no assurance that the Company will prevail in any lawsuit it commences against the Former Underwriter. The Company disputes the amounts owed that have been claimed by the Former Underwriter and further is of the belief that if any commissions are due to the Former Underwriter, they would be significantly less than the amounts claimed by the Former Underwriter. It is reasonably possible that the Company and the Former Underwriter will end up in litigation over claims by the Former Underwriter against the Company and claims by the Company against the Former Underwriter. Litigation is expensive and time consuming with uncertain outcomes.

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below and all of the other information contained in this prospectus and in any free writing prospectuses prepared by or on behalf of us or to which we have referred you, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” before deciding whether to invest in our securities. If any of the possible events described below actually occur, our business, business prospects, cash flow, results of operations or financial condition could be harmed. In this case, the trading price of our common stock could decline, and you might lose all or part of your investment.

There can be no is no guarantee that the Company will be successful in its Initial Public Offering.

On February 14, 2023, the Registration Statement on Form S-1 filed by the Company with the SEC was declared effective by the SEC. The Company planned to offer 1,850,000 shares of common stock (or 2,127,500 shares of common stock if the underwriters exercised their over-allotment option in full) at a price of $5.00 per share, for an aggregate offering of $9,250,000 (the “Offering”). The Company’s financial advisor, representative and lead underwriter for the Offering was Boustead Securities LLC (“Boustead”). Boustead had informed the Company of its decision not to proceed with pricing of the Company’s Offering. In addition, because the Offering was not timely priced, the Company was informed by NASDAQ on March 7, 2023 that it would not be in compliance with NASDAQ listing requirements and therefore the Company could not currently be listed on the NASDAQ. The Company has determined to continue to pursue an initial public offering (“IPO”) and NASDAQ listing of its securities as well as other possible financing alternatives. On April 12, 2023, the Company engaged Spartan Capital Securities, LLC (“Spartan”), as lead underwriter, deal manager and investment banker for the Company’s IPO. On October 6, 2023 Spartan terminated its engagement with the Company and on October 9, 2023 the Company engaged Westpark Capital, Inc. (“Westpark”), which was previously a joint book runner for the IPO, as lead underwriter, sole deal manager and investment banker for the Company’s IPO. There can be no assurance that we will be able to complete an IPO in the near future, if at all.

~~Although~~The ~~the~~Former ~~Company~~Underwriter ~~has~~may ~~entered~~not ~~into a contingent settlement agreement and~~ release ~~with Boustead, if this Offering is not consummated, Boustead may initiate a lawsuit claiming~~us ~~commissions~~from ~~owed~~its toROFR ~~them~~under byour ~~the~~engagement ~~Company~~letter ~~and the Company may initiate litigation against Boustead~~agreement.

OnThe ~~September 20, 2023, the~~ Company ~~entered~~executed ~~into a~~an ~~settlement~~engagement ~~agreement~~letter ~~and release~~ with ~~Boustead (~~ the ~~“Boustead~~Former ~~Agreement”)~~Underwriter tothat ~~settle~~terminates ~~any~~on ~~and~~the ~~all~~later ~~potential~~of ~~claims~~(i) ~~and~~eighteen ~~counterclaims by~~(18) ~~and~~months ~~between~~from the ~~Company~~date ~~and~~executed ~~Boustead with respect to the Engagement Letter dated~~ (March 23, 2021.) ~~The~~or ~~Company~~(ii) ~~and Boustead have agreed~~twelve tomonths afrom ~~contingent~~the ~~mutual~~completion ~~release~~date ~~and waiver~~ of ~~claims~~the inIPO ~~exchange~~and ~~for~~the aterm ~~cash~~may ~~payment~~be ofextended ~~$515,000~~pursuant byto the ~~Company~~engagement toletter. ~~Boustead~~The asCompany aagreed ~~deduction from~~that the advisor ~~offering~~shall ~~proceeds~~have ~~upon~~the ~~consummation~~right of ~~the~~first ~~Company’s~~refusal ~~IPO.~~(ROFR) ~~The~~for ~~Boustead~~two ~~Agreement~~(2) ~~also~~years ~~provides~~from ~~Boustead~~the ~~that~~consummation ~~certain~~of ~~indemnifications included~~a ~~under~~transaction ~~Section~~or 4termination or expiration of the Engagement Letter ~~continue.~~to ~~Unless~~act ~~otherwise~~as ~~amended,~~advisor ~~the~~or ~~Boustead~~as ~~Agreement~~joint ~~shall~~financial beadvisor ~~deemed~~under ~~null~~at ~~and void~~least inequal ~~the~~economic ~~event~~terms to the ~~Company’s~~Engagement ~~IPO~~Letter. The isFormer ~~not~~Underwriter ~~consummated~~has bya ~~December~~right ~~31,~~of ~~2023.~~first Ifrefusal ~~the~~(“ROFR”) ~~settlement~~pursuant isto ~~finalized~~the ~~with~~initial ~~the~~engagement ~~consummation of~~letter ~~the~~agreement ~~Company’s~~entered ~~initial~~into by ~~public~~and ~~offering,~~between the Company ~~does~~and ~~not~~the ~~anticipate~~Former ~~any additional charges related to this threatened litigation~~Underwriter.

InThere ~~the~~can ~~event~~be ~~the~~no ~~IPO~~assurance ~~and settlement agreement and release with Boustead Securities is not consummated, Boustead may continue to claim~~ that the ~~Company~~Former ~~owes or~~ Underwriter will ~~owe~~release ~~Boustead~~us ~~approximately $1 million~~from ~~for commissions on funds privately raised by~~ the ~~Company~~ROFR ~~during~~or ~~its~~that ~~engagement~~our ~~with~~ability ~~Boustead~~to ~~and~~complete ~~approximately~~an ~~$1,230,000 if~~IPO ~~the~~will ~~Company~~not ~~completes~~be animpeded ~~IPO~~as ~~with~~a ~~another underwriter~~result.

The Company disputes the amounts owed that have been claimed by Boustead and further is of the belief that if any commissions are due to Boustead, they would be significantly less that the amounts claimed by Boustead.

If the settlement is finalized with the consummation of the Company’s initial public offering, the Company does not anticipate any additional charges related to this threatened litigation.

Westpark and one of our directors have been named as respondents in a pending FINRA arbitration case, which could have a perceived negative effect on us or on our business.

Westpark Capital, Inc. (“WestPark”) and Robert Ainbinder, Jr., a director of the Company since April 2016, are respondents in a pending FINRA arbitration case (the “Arbitration”). The Arbitration was initiated in March 2023 by a group of investors in NYIAX alleging, among other allegations, that Mr. Ainbinder, WestPark Capital, Inc., and Mr. Ainbinder’s brother, committed fraud, breached contracts, and breached fiduciary duties inducing the claimants to invest in NYIAX, in relation to certain investments made by the claimants, while Mr. Ainbinder was a director of the Company and a broker at WestPark. Mr. Ainbinder informed the Company of the claims in August 2023. The claimants are seeking recovery of approximately $1.23 million, $850,000 of which represents investments made by the claimants more than six (6) years prior to initiation of the Arbitration. NYIAX is not a party to the Arbitration nor has the Company been named at this time in any related legal proceeding. Both Westpark and Mr. Ainbinder have denied any liability and both WestPark and Mr. Ainbinder have made a motion to dismiss the Arbitration. Until the Arbitration is resolved, it could potentially have a perceived negative impact on us or on our business.

We have historically incurred operating losses, experienced cash outflows from operations and we have accumulated deficit. Our net loss was approximately $7.4 million for the nine months ended September 30, 2023, $11.1 million for the year ended December 31, 2022, $13.5 million for the year ended December 31, 2021, and $6.2 million for the year ended December 31, 2020. As of September 30, 2023 and December 31, 2022, the Company had negative working capital of approximately $6.7 million and approximately $4.6 million, respectively, of which approximately $2.1 million and $2.4 million were non-cash liabilities consisting of convertible notes payable and payment in kind interest. The Company has also been historically reliant on sales of debt or equity securities to fund its working capital obligations. As a result, the Company is of the opinion that it will not have sufficient cash to meet working capital and capital requirements for at least twelve months from the date of this prospectus unless it is able to raise additional capital. Management has implemented various efforts to improve liquidity and conserve cash, including the sale of convertible notes and reducing staffing levels. Because we are not yet producing sufficient revenue to sustain our operating costs, we are dependent upon raising capital to continue our business. If we are unable to raise additional capital, increase revenue and reduce operating expenses we may not be able to continue as a going concern. See page 52 for the Going Concern, Liquidity and Capital Resources section of the Management Discussion and Analysis of Financial Condition and Results of the of Operations for further discussion of the Company’s liquidity and capital resources.

The effects of the COVID-19 pandemic, including the resulting global economic uncertainty, and measures taken in response to the pandemic, have had, and could in the future have, an adverse impact on our business, financial condition and results of operations.

Our business and operations have been and could in the future be adversely affected by health epidemics, such as the global COVID-19 pandemic. The COVID-19 pandemic and efforts to control its spread have curtailed the movement of people, goods and services worldwide, including in the regions in which we and our clients and partners operate, and are significantly impacting economic activity and financial markets. While the COVID-19 pandemic has generally accelerated a move from traditional media to digital media, many marketers have decreased or paused their advertising spending as a response to the economic uncertainty, decline in business activity, and other COVID-related impacts, which have negatively impacted, and may continue to negatively impact, our revenue and results of operations, the extent and duration of which we may not be able to accurately predict. As a result, our financial condition and results of operations may be adversely impacted.

Our operations are subject to a range of external factors related to the COVID-19 pandemic that are not within our control. We have taken precautionary measures intended to minimize the risk of the spread of the virus to our employees, partners and clients, and the communities in which we operate. A wide range of governmental restrictions have also been imposed on our employees, clients and partners’ physical movement to limit the spread of COVID-19. There can be no assurance that precautionary measures, whether adopted by us or imposed by others, will be effective, and such measures could negatively affect our sales, marketing, and client service efforts, delay and lengthen our sales cycles, decrease our employees’, clients’, or partners’ productivity, or create operational or other challenges, any of which could harm our business and results of operations.

The economic uncertainty caused by the COVID-19 pandemic has made and may continue to make it difficult for us to forecast revenue and operating results and to make decisions regarding operational cost structures and investments. We have committed, and we plan to continue to commit, resources to grow our business, including technology development, and such investments may not yield anticipated returns, particularly if worldwide business activity continues to be impacted by the COVID-19 pandemic. The duration and extent of the impact from the COVID-19 pandemic depend on future developments that cannot be accurately predicted at this time, and if we are not able to respond to and manage the impact of such events effectively, our business may be harmed.

A recession, depression, or other sustained adverse market events resulting from the spread of COVID-19 could adversely affect our business, results of operations, and financial condition, as well as the value of our common stock. Our customers or potential customers, particularly in industries most impacted by the COVID-19 pandemic including transportation, travel and hospitality, retail, and energy, may reduce their advertising spending or delay their advertising initiatives, which could adversely affect our business, results of operations, and financial condition. We may also experience curtailed customer demand, reduced customer spend or contract duration, delayed collections, lengthened payment terms, and increased competition due to changes in terms and conditions and pricing of our competitors’ products and services.

Our business is subject to the risk of catastrophic events such as pandemics, earthquakes, flooding, fire, and power outages, and to interruption by man-made problems such as terrorism and wars.

Our business is vulnerable to damage or interruption from pandemics, earthquakes, flooding, fire, power outages, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, and similar events. In particular, the COVID-19 pandemic, including the reactions of governments, markets, and the general public, may result in a number of adverse consequences for our business, results of operations, and financial condition, many of which are beyond our control. A significant natural disaster could have a material adverse effect on our business, results of operations, ~~and~~ and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur.

Our business, financial condition and results of operations may be negatively affected by economic and other consequences from Russia’s military action against Ukraine and the international sanctions imposed in response to that action.

We employ a U.S. based development company, BWSoft Management LLC, (“BWSoft”) with employees around the world, including Russia. In late February 2022, Russia launched a large-scale military attack on Ukraine. In response to the military action by Russia, various countries, including the United States, issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies. The war in Ukraine and related sanctions imposed on Russia could limit our ability to transact with our developer that has employees located in Russia. Currently, BWSoft is not under sanctions. The Company, along with BWSoft carefully monitors regulation initiatives. In the event of future sanctions, BWSoft and NYIAX will react accordingly to provide consistent and safe development services to NYIAX. We are currently reviewing other options for our external development. If our developer were to terminate the employment of these development team members located in Russia, such termination could disrupt or delay the development of incremental features to our platform, increase our costs, or force us to shift development efforts to resources in other geographies that may not possess the same level of cost efficiencies. Additionally, as of the date of this ~~quarterly report on Form 10-Q~~prospectus, there are no import or export control restrictions applicable to our business or our relationship with BWSoft.

Since our formation, we have never been profitable. Our lack of operating history makes it difficult to evaluate our business and prospects and may increase the risks associated with an investment in our Common Stock.

Since our formation, we have never been profitable. Our lack of operating history makes it difficult to evaluate our business and prospects and there can be no guarantee that we will ever be profitable. Furthermore, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements for our business will not exceed our estimates. In particular, additional capital may be required if our operating costs increase beyond our expectations or we encounter greater costs associated with general and administrative expenses or other costs.

We may not be able to execute our business plan or stay in business without additional or adequate funding.

Our ability to successfully develop our business, generate operating revenues and achieve profitability will depend upon our ability to obtain the necessary or adequate financing to implement our business plan. We will require financing through the issuance of additional debt and/or equity to implement our business plan, including identifying, acquiring and distributing consumer products, building inventory, hiring additional personnel as needed and eventually establishing profitable operations. Such financing may not be forthcoming. As has been widely reported, global and domestic financial markets and economic conditions have been, and continue to be, disrupted and volatile due to a variety of factors, including, but not limited to, economic conditions caused by the COVID-19 pandemic. As a result, the cost of raising money in the debt and equity capital markets may increase while the availability of funds from those markets could diminished significantly, even more so for smaller companies like ours. If such conditions and constraints exist, we may not be able to acquire funds either through credit markets or through equity markets and, even if financing is available, it may not be available on terms which we find favorable. Failure to secure funding when needed will have an adverse effect on our ability to meet our obligations and remain in business.

The lack of a Board comprised of a majority of independent directors prior to our initial public offering might have resulted in transactions or the resolution of disputes on terms less favorable as those that might have been negotiated had the Board been comprised of a majority of independent directors.

Prior to the date of this prospectus, our board of directors (the “Board”) was not comprised of a majority of independent directors, as required by Nasdaq Rules for companies with securities listed on NASDAQ. As a result, actual or potential conflicts of interest might have existed in connection with previous transactions or the resolution of disputes involving the Company or the Board, particularly those in which directors of the Company might have had a direct or indirect interest. Accordingly, there can be no assurance that transactions or the resolution of disputes occurring prior to the date of this prospectus were negotiated on terms as favorable as those that might have been negotiated had the Board been comprised of a majority of independent directors.

We will have a Board with new members and an even number of directors.

Following the ~~planned~~resignation ~~initial~~of ~~public~~a ~~offering,~~Board member on April 30, 2024, and the appointment of three (3) new independent members, the Company’s Board ~~will~~consists ~~consist~~ of uptwo tolong-term members that are also included as management, the new chief executive officer, and three (3) new independent members. The new directors have not worked together or with management. The new directors will have different backgrounds, experiences and perspectives from those individuals who have historically served on our Board and may have different views on the direction of our business. The effect of implementation of those views may be difficult to predict and may result in conflict amongst the Board members or with management, at least in the short term, and could result in disruption of the strategic direction of our business. Furthermore, following the appointments of our three (3) independent director nominees to the Board, which will occur upon the first day of trading of the Company stock, we will have an even number of directors on our Board. With an even number of directors, the Board could deadlock on certain issues.

Additionally, the ability of the new directors to quickly expand their knowledge of our business operations will be critical to their ability to make informed decisions about our business and strategies, particularly given the competitive environment in which we operate. There can be no assurance that our new directors will have the ability to gain the requisite knowledge in a timely matter.

Legislation and regulation of online businesses, including privacy and data protection regulations/restrictions, could create unexpected costs, subject us to enforcement actions for compliance failures, or cause us to change our technology platform or business model, which could have a material adverse effect on our business.

Government regulation could increase the costs of doing business online. U.S. and foreign governments have enacted or are considering legislation related to online advertising and we expect to see an increase in legislation and regulation related to advertising online, the use of geo-location data to inform advertising, the collection and use of anonymous Internet user data and unique device identifiers, such as IP address or unique mobile device identifiers, and other data protection and privacy regulation. Recent revelations about bulk online data collection by the National Security Agency, and news articles suggesting that the National Security Agency may gather data from cookies placed by Internet advertisers to deliver interest-based advertising, may further interest governments in legislation regulating data collection by commercial entities, such as advertisers and publishers and technology companies that serve the advertising industry. Such legislation could affect the costs of doing business online and could reduce the demand for our solution or otherwise harm our business, financial condition and results of operations. For example, a wide variety of provincial, state, national and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. Our failure to comply with applicable laws and regulations, or to protect personal data, could result in enforcement action against us, including fines, imprisonment of our officers and public censure, claims for damages by consumers and other affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse impact on our business, financial condition and results of operations. Even the perception of privacy concerns, whether or not valid, could harm our reputation and inhibit adoption of our solution by current and future advertisers and advertising agencies.

Fee pressure may result in a reduction in the fees we are able to charge on our platform, which could have a material adverse effect on our business.

Fee pressure would be any pressure from publishers or advertisers to reduce the percentage that NYIAX would receive due to the downturn of the value of instruments or specific instruments including mismatched pricing. Fee pressures also have to do with the cyclicality of the advertising market, which is dependent upon the spend based on the particular time of the year. Any fee pressure could have a material adverse impact on the Company’s business and results of operations.

Projecting the market’s acceptance of a new price or structure is imperfect and we may price too high or too low, both of which may carry adverse consequences.

If our estimates related to expenditures are inaccurate, our business may fail.

Our success is dependent in part upon the accuracy of our management’s estimates of expenditures for the next twelve months and beyond. If such estimates are inaccurate, or we encounter unforeseen expenses and delays, we may not be able to carry out our business plan, which could result in the failure of our business.

Because we rely on third-party blockchain technologies, users of our platform could be subject to blockchain protocol risks.

Reliance upon other third-party blockchain technologies to create our platform subjects us and our customers to the risk of ecosystem malfunction, unintended function, unexpected functioning of, or attack on, the providers’ blockchain protocol, which may cause our platform to malfunction or function in an unexpected manner, including, but not limited to, slowdown or complete cessation in functionality of the platform.

Artificial Intelligence May Have a Risks to the Company’s Operations and Profitability

As Artificial Intelligence (AI) evolves, AI laws, regulations, and standards all may impact the Company’s productivity and profitability as well as have an impact on increased cybersecurity risks and social and ethical challenges from reliance on third-party AI systems. The Company is studying AI and its potential impacts.

We depend on a limited number of customers and the loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.

As of ~~September~~June 30, ~~2023~~2024, ~~two~~3 Media Buyers represented 3630%, 29% and 2522% of accounts receivable. AsFor ofthe ~~September~~six months ended June 30, ~~2023~~2024, ~~two~~4 ~~Media~~customers ~~Sellers~~ represented 8037%, 28%, 18% and 10% of ~~accounts payable~~revenue, net. ~~For~~As ~~the~~of ~~nine months~~June ~~ended September~~ 30, ~~2023~~2024, two ~~customers~~Media Sellers represented 5081% and 1110% of ~~revenue,~~accounts ~~net~~payable.

As of December 31, ~~2022~~2023, ~~two~~three Media Buyer represented ~~for~~34%, 6725% and 2018% of accounts receivable. As of December 31, ~~2022~~2023, two Media Sellers represented ~~of 61~~80% and 810% of accounts payable.

~~For the nine months ended September 30, 2022 one customer represented 88% of revenue, net.~~38

For the six months ended June 30, 2023, two customers represented 50% and 11% of revenue, net. As of June 30, 2023, two Media Buyers represented 36% and 25% of accounts receivable. As of June 30, 2023, two Media Sellers represented 80% and 10% of accounts payable.

Due to the concentration of revenues from a limited number of customers, if we do not receive the payments from or if our relationships become impaired with any of these major customers, our revenue, results of operation and financial condition will be negatively impacted.

In addition, we cannot assure that any of our customers in the future will not cease using our products and services, significantly reduce orders or seek price reductions in the future, and any such event could have a material adverse effect on our revenue, profitability, and results of operations.

Our revenue and operating results will be highly dependent on the overall demand for advertising and could fluctuate significantly depending upon various factors, such as seasonal fluctuations and market changes. Factors that affect the amount of advertising spending, such as economic downturns, particularly in the fourth quarter of our fiscal year, will make it difficult to predict our revenue, and could cause our operating results to fall below investors’ expectations and adversely affect our business and financial condition.

Our business depends on the overall demand for advertising and on the economic health of our current and prospective sellers and buyers. If advertisers reduce their overall advertising spending, our revenue and results of operations are directly affected. Many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing, and buyers may spend more in the fourth quarter for budget reasons. As a result, any events that reduce the amount of advertising spending during the fourth quarter or reduce the amount of inventory available to buyers during that period, could have a disproportionate adverse effect on our revenue and operating results for that fiscal year. Economic downturns or instability in political or market conditions generally may cause current or new advertisers to reduce their advertising budgets. Reductions in inventory due to loss of sellers would make our solution less robust and attractive to buyers. Adverse economic conditions and general uncertainty about economic recovery are likely to affect our business prospects. Uncertainty regarding economic conditions in the United States and other countries may cause general business conditions in the United States and elsewhere to deteriorate or become volatile, which could cause buyers to delay, decrease or cancel purchases, exposing us to reduced demand for our solution, and increased credit risk on buyer orders. Moreover, any changes in the favorable tax treatment of advertising expenses and the deductibility thereof would likely cause a reduction in advertising demand. In addition, concerns over the sovereign debt situation in certain countries in the European Union as well as continued geopolitical turmoil in many parts of the world have and may continue to put pressure on global economic conditions, which could lead to reduced spending on advertising.

Our revenue, cash flow from operations, operating results and other key operating and financial measures may vary from quarter to quarter due to the seasonal nature of advertiser spending. For example, many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with increased holiday purchasing. Moreover, advertising inventory in the fourth quarter may be more expensive due to increased demand for advertising inventory.

Our revenue can vary greatly from period to period and it is dependent on several factors, including on our business development team and the Media Contracts. Our net revenue decreased sequentially quarter on quarter in 2022 and 2023.

Our business is in the early stage and depends on the overall demand for digital advertising, the economic health of our current and prospective sellers and buyers and the on-boarding of new Media Contracts, which can vary greatly from period to period. WeThe ~~currently~~value ~~have only a limited number~~ of ~~buyers~~each ~~and sellers on our platform and need to increase the number of~~ Media Contracts invaries ~~order to increase our revenues. Obtaining new Media Contracts is~~ dependent on ~~several~~upon several factors, including onsize ~~our~~of ~~new~~the ~~business~~media ~~development~~buy ~~(sales~~ and ~~representatives)~~commission ~~team, which headcount has decreased from eleven at December 31, 2021 to three at December 31, 2022~~rates. ~~(At~~We ~~March~~currently ~~31,~~have ~~2021,~~only ~~the~~a ~~business~~limited ~~development~~number ~~headcount~~of ~~was~~buyers ~~one~~ and ~~revenue~~sellers ~~for~~on ~~the~~our platform ~~three-month~~and ~~period~~need ~~ended~~to ~~March~~increase ~~31, 2021 was nil.). Additionally,~~ the ~~value~~number of ~~each~~ Media Contracts ~~varies~~in ~~dependent~~order ~~upon~~to ~~several~~increase ~~factors, including~~our ~~size of the media buy and commission rates~~revenues.

InRevenue ~~addition,~~is ~~our~~also ~~revenue~~dependent ~~from~~upon ~~quarter~~the ~~to quarter~~cumulative ~~has~~effort ~~decreased~~of ~~for~~business ~~the~~development ~~three~~employees ~~quarters~~driving ~~ended~~revenue ~~September~~relationships ~~30,~~to ~~2022~~the ~~and~~Company. ~~the~~The ~~two~~Company ~~quarters~~does ~~ended~~not ~~June~~currently ~~30,~~have ~~2023,~~a book of repeatable business and ~~increased~~as ~~for~~such ~~the~~revenue ~~quarter ended~~is ~~December~~substantially ~~31,~~dependent ~~2022,~~upon ~~and~~business ~~September~~development ~~30,~~headcount ~~2023,~~driving asrelationships ~~follows:~~and new transactions.

March 31, 2022	$	485,065
June 30, 2022		339,423
September 30, 2022		124,987
December 31, 2022		374,830
March 31, 2023		138,037
June 30, 2023		88,977
September 30, 2023		97,820

Obtaining new Media Contracts is dependent on several factors, including on our new business development (sales and representatives) team, which headcount has decreased from eleven at December 31, 2021 to three at March 31, 2023. (At March 31, 2021, the business development headcount was one and revenue for the three-month period ended March 31, 2021 was nil.)

~~There~~In ~~can~~addition, beour norevenue ~~assurance~~from ~~that~~quarter weto ~~will~~quarter behas ~~able~~decreased for toquarters ~~increase~~ended ~~the~~March ~~number~~31, of2022, ~~Media~~June ~~Contracts~~30, ~~the~~2022, ~~value~~September ~~per~~30, ~~Media Contract~~2022, orMarch ~~our~~31, ~~overall~~2023, ~~revenue.~~and InJune ~~the~~30, ~~event~~2023, ~~that~~and weincreased ~~are~~for ~~unable~~the toquarters ~~increase~~ended ~~the~~December ~~number~~31, of2022, ~~Media~~September ~~Contracts~~30, ~~and/or~~2023, ~~the~~December ~~value~~31, ~~per Media Contract~~2023, onMarch ~~our platform~~31, we2024 ~~will not be able to increase revenues~~ and ~~may~~June ~~be unable~~30,2024 toas ~~continue in business.~~follows:

	Quarterly Revenue
Quarter Ending March 31, 2022	$	485,065
Quarter Ending June 30, 2022		339,423
Quarter Ending September 30, 2022		124,987
Quarter Ending December 31, 2022		374,830
Year Ending December 31, 2022	$	1,324,305

Quarter Ending March 31, 2023	$	138,037
Quarter Ending June 30, 2023		88,978
Quarter Ending September 30, 2023		97,820
Quarter Ending December 31, 2023		331,266
Year Ending December 31, 2023	$	656,101

Quarter Ending March 31, 2024	$	81,544
Quarter Ending June 30, 2024	$	83,310

There can be no assurance that we will be able to increase the number of Media Contracts the value per Media Contract, or our overall revenue. In the event that we are unable to increase the number of Media Contracts and/or the value per Media Contract, on our platform, we will not be able to increase revenues and may be unable to continue in business.

Our business depends substantially on the continuing efforts of our executive officers and key employees, and our business may be severely disrupted if we lose their services.

Our future success depends substantially on the continued services of our executive officers and key employees. If one or more of our executive officers and key employees are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. The loss of any of our officers, including the chief executive officer, and key employees could cause our business to be disrupted, and we may incur additional expenses to recruit and retain their replacements. On May 26, 2022, Robert E. Ainbinder resigned as our Chief Executive Officer, while he continues to serve as a Director of the Company. On the same day, Christopher Hogan, our Chief Operating Officer, was appointed Interim Chief Executive Officer and President. ~~The~~On ~~Board~~January of19, ~~Directors~~2024, ~~will~~Teresa beGallo, ~~exploring~~was ~~candidates~~appointed ~~for~~Chief Executive Officer of the ~~position~~Company. With the recent appointment of our new Chief Executive Officer, the Interim Chief Executive Officer position previously held by Mr. Hogan has been eliminated, as planned.

41Our Chief Executive Officer is new to the Company.

On January 19, 2024, Teresa Gallo, was appointed Chief Executive Officer of the Company. Previously, to her appointment she was not with the Company. In 2023 Ms. Gallo founded Assemblage Digital, a boutique advisory firm focused on digital marketing, commercial strategies, and revenue development for technology companies. From May 2020 to May 2023, Ms. Gallo served as Executive Vice President and General Manager at Kinneso, a technology driven marketing and advertising agency and affiliate of Interpublic Group of Companies, Inc. (“IPG”), in New York, New York. Ms. Gallo led Kinneso’s global marketplace team and was responsible for organization design, strategy, operations, revenue delivery, partnerships and market expansion of its business. From December 2018 to May 2020, Ms. Gallo served as Chief Digital Officer for Orion, a subsidiary of IPG, where she oversaw Orion’s worldwide digital business and designed the roll-out and implementation of Orion’s programmatic advertising platform for publisher and advertiser utilization. From October 2013 to July 2018, Ms. Gallo served as Senior Vice President at OpenX, a programmatic advertising platform for publishers, advertisers, and agencies. Ms. Gallo was responsible for OpenX’s global corporate business development for publishers and advertisers. Prior to joining Open X, Ms. Gallo was a founding executive at Cadreon, IPG’s first global programmatic agency and she spent over a decade at AOL in leadership roles. Ms. Gallo currently serves on the board of directors of the Rutgers University Center for Innovation Education, where she participated in framing the direction and growth of the Rutgers’s Innovation Center and its Professional Science master’s degree in data.

Our management team has limited experience managing a public company and we will incur significantly increased costs and devote substantial management time as a result of operating as a public company.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules, and regulations that govern public companies. As a public company, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations. These obligations and scrutiny will require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations, and financial condition. We expect that compliance with these requirements will increase our compliance costs. We will need to hire additional accounting, financial, and legal staff with appropriate public company experience and technical accounting knowledge and will need to establish an internal audit function. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of these costs.

We may be subject to litigation from time to time during the normal course of business, which may adversely affect our business, financial condition and results of operations.

~~Although~~The weCompany, Robert Ainbinder, Jr., a director of the Company, and WestPark Capital, Inc. are ~~not~~named ~~currently~~defendants ~~subject~~in toa ~~any~~pending ~~material~~case filed in the United States District Court for the Southern ~~pending~~District ~~litigation~~of ~~proceedings,~~New ~~from~~York by a group of investors in NYIAX. From time to time in the normal course of business or otherwise, we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to business operation are required. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition and results of operations.

We ~~will~~are be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our shareholders could receive less information than they might expect to receive from more mature public companies.

Upon the completion of ~~our~~this ~~initial public~~ offering, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the JOBS Act) under ~~the~~ the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to:

●

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

●

being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

●

being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any ~~September~~June 30 before that time, we ~~would~~ would cease to be an emerging growth company as of the following December 31.

Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock.

If we fail to establish and maintain effective internal controls, our ability to produce accurate financial statements and other disclosures on a timely basis could be impaired.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to our principal executive and financial officers.

We are also continuing to expand our internal controls over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, and significant management oversight. If any of these new or improved controls and systems do not perform as expected, we may experience material weaknesses in our controls. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

We have identified material weaknesses in our internal control over financial reporting in connection with the preparation of our financial statements for the periods ended ~~September~~June 30, ~~2021~~2023, ~~and~~March ~~2022~~31, 2023, and the fiscal years ended December 31, ~~2022,~~2023 ~~2021~~ and ~~2020~~2022, and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate our material weakness or if we fail to establish and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, meet our reporting obligations, or prevent fraud. Failure to comply with requirements to design, implement and maintain effective internal controls or any inability to report and file our financial results accurately and timely could harm our business and adversely impact the trading price of our securities. ~~(see item 9A for further details)~~

Prior to ~~this~~becoming ~~offering~~a reporting company, we were a private company and had limited accounting and financial reporting personnel and other resources with which to address our internal controls and procedures. In connection with the review of our consolidated financial statements for the ~~period ended September 30, 2021 and the~~ years ended December 31, ~~2022, 2021~~ 2023 and ~~2020~~2022 included in this ~~prospectus~~Form 10-K, our management identified material weaknesses in our internal control over financial reporting. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or or detected on a timely basis. Specifically, we identified certain payments made that were not in accordance with our policies, including reimbursement of expenses more than amounts owed, reimbursement of expenses without adequate documentation, and inadequate reporting of amounts paid to contractors.

The material weaknesses identified by management are related to material errors over our financial reporting which required the restatement of our financial statements for the year ended December 31, 2021 and the nine-month period ended September 30, 2021. As of the date hereof, these material weaknesses have not been remedied. Specifically, these material weaknesses relate to the following:

● Material out of period adjustments over our accounting of deferred offering cost and debt discount fees related to the Boustead Securities, LLC underwriting and financing fee agreement. The Boustead Securities LLC fees were not recorded in the year ended December 31, 2021 and the nine-month period ended September 30, 2021.

~~● For the year ended December 31~~Specifically, ~~2021 and~~ the ~~nine-month~~material ~~period~~weakness ~~ended~~related ~~September 30, 2021, the Company did not properly account for its principal stockholder share-based payment awards. The principal stockholder share-based payment awards required the Company~~ to ~~record~~ the value of the compensation as share-based compensation as performance conditions were met. The share-based compensation expenses were not recorded in the year ended December 31, 2021 and the nine-month period ended September 30, 2021.following:

● For the ~~year~~six-month period ended ~~December~~June ~~31,~~30 ~~2022~~ 2023 and asthe ofthree-month period ended March 31, 2023, ~~there were material weakness identified in~~ the Company’s ~~Information~~did ~~Technology~~not ~~General~~report ~~Controls (“ITGCs”). The control deficiencies identified were over~~ the ~~design~~treatment of ~~internal~~deferred ~~controls~~offering ~~surrounding~~costs ~~user~~in ~~access~~accordance ~~security,~~with ~~and~~ASC ~~change~~230, ~~management for~~Statement ~~the~~of ~~Company’s~~Cash ~~internally~~Flows. ~~developed~~In ~~applications~~accordance ~~and~~with ~~external~~ASC ~~financial~~230-~~based~~10-50, ~~software~~deferred ~~used~~offering bycost ~~the~~write-off ~~Company.~~should ~~These~~be ~~deficiencies were~~reflected in ~~regards~~statement ~~to user access provisioning, terminations, user access review, change management, segregation~~ of ~~duties~~cash offlows ~~developers and~~within ~~migrators.~~cash ~~The~~flows ~~Company’s~~from ~~ITGCs~~operating ~~were~~activities ~~not designed~~ and not ~~operating~~within ~~effectively~~cash toflows ~~ensure~~from ~~(i)~~financing ~~appropriate~~activities ~~segregation~~as ofpreviously ~~duties were~~reported in ~~place~~the toCompany’s ~~perform~~Quarterly ~~program~~Report ~~changes~~on ~~and~~Form ~~(ii)~~10-Q ~~activities~~for ofthe ~~individuals~~quarter ~~with~~ended ~~access~~March to31, ~~modify~~2023, ~~data~~filed ~~and~~with ~~make~~the ~~program~~SEC ~~changes~~on ~~not~~July ~~being appropriately~~21, ~~monitored.~~2023, ~~These~~and ~~control~~the ~~deficiencies~~Company’s ~~aggregated~~Quarterly toReport aon ~~Material~~Form ~~Weakness~~10-Q for ~~Information~~the ~~Technology~~quarter ~~General~~ended ~~Controls~~June ~~for absence~~30, ~~and~~2023, ~~limited~~filed ~~or no presence of compensating IT Controls that mitigate the risk associated~~ with the ITSEC ~~deficiencies.~~on ~~There~~August is14, ~~a risk under the current circumstances that intentional or unintentional errors could occur and not be detected~~2023.

●

For the year ended December 31, 2022 and as of June 30, 2023, there were material weakness identified in the Company’s Information Technology General Controls (“ITGCs”). The control deficiencies identified were over the design of internal controls surrounding user access security, and change management for the Company’s internally developed applications and external financial-based software used by the Company. These deficiencies were in regards to user access provisioning, terminations, user access review, change management, segregation of duties of developers and migrators. The Company’s ITGCs were not designed and not operating effectively to ensure (i) appropriate segregation of duties were in place to perform program changes and (ii) activities of individuals with access to modify data and make program changes not being appropriately monitored. These control deficiencies aggregated to a Material Weakness for Information Technology General Controls for absence and limited or no presence of compensating IT Controls that mitigate the risk associated with the IT deficiencies. There is a risk under the current circumstances that intentional or unintentional errors could occur and not be detected.

The restatement matters were primarily the result of our lack of internal controls over completeness of contract recording and accounting personnel that lack experience in SEC reporting regulation.

As part of our plan to remediate these material weaknesses, we have adopted the following remediation efforts to improve our internal controls:

●

Hired incremental financial staff

●

Established separation of duties for cash payments

●

Instituted new policies for:

●

Expense and payment approvals

●

Payment procedures that include segregation of duties

●

Travel and entertainment reimbursement (revisions of previous policies)

●

Ethics

●

Reviewed payments to contractors

●

Reinforced policies regarding board approval of all material contracts

●

Will be retaining experienced accounting personnel that have experience in SEC reporting regulation after the IPO is completed.

Risks Related to the Advertising Technology Industry, Market and Competition

The digital advertising market is relatively new, dependent on growth in various digital advertising channels, and vulnerable to adverse public perceptions and increased regulatory responses. If this market develops more slowly or differently than we expect, or if issues encountered by other participants or the industry generally are imputed to or affect us, our business, growth prospects and financial condition would be adversely affected. Our technology could become obsolete and increased competition could adversely affect our business.

The digital advertising market is relatively new, and our solution may not achieve or sustain high levels of demand and market acceptance. While display advertising has been used successfully for many years, marketing via new digital advertising channels, such as mobile and social media and digital video advertising, is not as well established. The future growth of our business could be constrained by the level of acceptance and expansion of emerging digital advertising channels, as well as the continued use and growth of existing channels, such as digital display advertising, in which our capabilities are more established.

Further, the digital advertising industry is complex, and evolving, and there are relatively few publicly traded companies operating in the business. Consequently, the digital advertising industry may not be as widely followed or understood in the financial markets as more mature industries. Problems experienced by one industry participant (even private companies) or issues affecting a part of the business have the potential to have adverse effects on other participants in the industry or even the entire industry. Emerging understanding of how the digital advertising industry operates has spurred privacy concerns and misgivings about exploitation of consumer information and prompted regulatory responses that limit operational flexibility and impose compliance costs upon industry participants. As a general matter the digital advertising business is relatively new and digital advertising companies and their specific product and service offerings are not well understood.

Any expansion of the market for digital advertising solutions depends on several factors, including social and regulatory acceptance, the growth of the digital advertising market, the growth of social, mobile and video as advertising channels, and the actual or perceived technological viability, quality, cost, performance and value associated with emerging digital advertising solutions. If demand for digital display advertising and adoption of automation does not continue to grow, or if digital advertising solutions or advertising automation do not achieve widespread adoption, or there is a reduction in demand for digital advertising caused by weakening economic conditions, decreases in corporate spending, quality, viewability, malware issues or other issues associated with buyers, advertising channels or inventory, negative perceptions of digital advertising, additional regulatory requirements, or other factors, or if we fail to develop or acquire capabilities to meet the evolving business and regulatory requirements and needs of buyers and sellers of multi-channel advertising, our competitive position will be weakened and our revenue and results of operations could be harmed.

Our future operating results depend on market adoption by both advertisers and publishers, which could take a long period of time or may not happen at all. Any delay or failure to adopt by either Media Buyers or Media Sellers could delay revenue or recognition of revenue.

We operate in an intensely competitive market that includes companies that have greater financial, technical and marketing resources than we do. If we do not effectively compete against current and future competitors, our business, results of operations, and financial condition could be harmed.

There are other competitors which have vast access to resources and could have the ability to replicate a similar business model in time or with a highly scalable and financially rigorous transaction platform. Our ability to compete successfully depends on elements both within and outside of our control. We will face significant competition from major global companies as well as smaller companies focused on specific market niches. In addition, companies not currently in direct competition with us may introduce competing products in the future.

Our inability to compete effectively could materially adversely affect our business and results of operations. Products or technologies developed by competitors that are larger and have more substantial research and development budgets, or that are smaller and more targeted in their development efforts, may render our products or technologies obsolete or noncompetitive. We also may be unable to market and sell our products if they are not competitive on the basis of price, quality, technical performance, execution, features, system compatibility, customized design, innovation, availability, delivery timing and/or reliability. If we fail to compete effectively on developing strategic relationships with customers, our sales and revenue may be materially adversely affected. Competitive pressures may limit our ability to transact business, raise prices, and any inability to maintain revenue or raise prices to offset increases in costs could have a significant adverse effect on our gross margins (deficits). Reduced sales, lower gross margins, or deficits, would materially adversely affect our business and results of operations.

Our inability to compete effectively could materially adversely affect our business and results of operations. Products or technologies developed by competitors that are larger and have more substantial research and development budgets, or that are smaller and more targeted in their development efforts, may render our products or technologies obsolete or noncompetitive. We also may be unable to market and sell our products if they are not competitive on the basis of price, quality, technical performance, execution, features, system compatibility, customized design, innovation, availability, delivery timing and/or reliability. If we fail to compete effectively on developing strategic relationships with customers, our sales and revenue may be materially adversely affected. Competitive pressures may limit our ability to transact business, raise prices, and any inability to maintain revenue or raise prices to offset increases in costs could have a significant adverse effect on our gross margin, possibly contributing to a deficit in our gross margin. Reduced sales and lower gross margins (deficits) would materially adversely affect our business and results of operations.

Technology breaches or failures, including those resulting from a malicious cyber-attack on us or our business partners and service providers, could disrupt or otherwise negatively impact our business.

We will rely on information technology systems, including systems of Nasdaq Technology AB (“Nasdaq”), a wholly-owned subsidiary of Nasdaq, Inc., as part of our agreement with Nasdaq to process, transmit, store and protect the electronic information, financial data and proprietary models that are critical to our business. Furthermore, a significant portion of the communications between our employees and our business, banking and investment partners depends on information technology and electronic information exchange. Like all companies, our information technology systems and Nasdaq’s are vulnerable to data breaches, interruptions or failures due to events that may be beyond our control, including, but not limited to, natural disasters, theft, terrorist attacks, computer viruses, hackers and general technology failures.

Errors or failures in our software and transaction systems with Nasdaq could adversely affect our operating results and growth prospects. Moreover, errors in debugging or breaks in our system could create delay in publisher and advertiser adoption, which would have adverse effect on our business.

We believe that we have established and implemented appropriate security measures, controls and procedures to safeguard our information technology systems and to prevent unauthorized access to such systems and any data processed or stored in such systems and procedures. Despite these safeguards, disruptions to and breaches of our information technology systems are possible and may negatively impact our business. We have not secured insurance coverage designed to specifically protect us from an economic loss resulting from such events.

Our future success is dependent on Internet technology developments and our ability to adapt to these and other technological changes and to meet evolving industry standards.

Our ability to operate our business is dependent on the development and maintenance of Internet technology as well as our ability to adapt our solutions to changes in Internet technology.

We may encounter difficulties responding to these and other technological changes that could delay our introduction of products and services. The software and tech industries are characterized by rapid technological change and obsolescence, frequent product introduction, and evolving industry standards. Our future success will, to a significant extent, depend on our ability to enhance our existing products, develop and introduce new products, satisfy an expanded range of customer needs, and achieve market acceptance. We may not have sufficient resources to make the necessary investments to develop and implement the technological advances required to operate our business or maintain a competitive position.

Our intellectual property is valuable and integral to our success and competitive position. Any misuse of our intellectual property by others could harm our business, reputation and competitive position.

Our patent, copyrights, trade secrets and designs are valuable and integral to our success and competitive position. Despite our efforts to protect our intellectual property rights, we cannot assure you that we will be able to adequately protect our proprietary rights through reliance on a combination of patent, copyrights, trade secrets, confidentiality procedures, contractual provisions and technical measures from outside influences. Protection of trade secrets and other intellectual property rights in the markets in which we operate and compete is highly uncertain and may involve complex legal questions. In addition, the laws of various foreign countries may not protect our intellectual property rights to the same extent as laws in the United States. We cannot completely prevent the unauthorized use or infringement of our intellectual property rights, as such prevention is inherently difficult.

We also expect that the more successful we are, the more likely that competitors will try to illegally use our proprietary information and develop products that are like ours, which may infringe on our proprietary rights. In addition, we could potentially lose future trade secret protection for our source code if any unauthorized disclosure of such code occurs. The loss of future trade secret protection could make it easier for third parties to devise and implement competitive products (and services) more easily. Any changes in, or unexpected interpretations of, the trade secret and other intellectual property laws in any country in which we operate may compromise our ability to enforce our trade secret and intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our confidential information and trade secret protection. If we are unable to protect our proprietary rights or if third parties independently develop or gain access to our or similar technologies, our business, service revenue, reputation and competitive position could be materially adversely affected.

46No proven ability to commercialize our intellectual property.

To date we have generated relatively limited revenues from the exploitation or commercialization of our intellectual property, particularly our patents. In addition, we recently acquired a portfolio of patents and trade secrets from Network Foundation Technologies, LLC (“Nifty”) in exchange for two million (2,000,000) shares of our common stock. To our knowledge, Nifty had not generated any revenue from the commercialization of such portfolio of patents and trade secrets and there can be no assurance that we will realize any commercial benefits or revenue from such patents and/or trade secrets.

On December 26, 2024, the NYIAX board of directors decided that until the Company has secured sufficient financing, the Company is delaying the commercialization of the Portfolio and creating a revenue stream. If the Company is unable to raise adequate capital in a timely manner, there will be insufficient useful life of the Portfolio, and the Company will not be able to commercialize the Portfolio and create a revenue stream.

We may be subject to intellectual property rights claims and validity challenges by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.

Third parties may assert claims of infringement of intellectual property rights in proprietary technology or initiate invalidity proceedings challenging our patents, against us or against our advertisers for which we may be liable or have an indemnification obligation. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could distract our management from operating our business. We might not have the necessary capital to defend against any potential claims which could adversely affect our business. There can be no assurance that any patents which we may file will be granted by the USPTO and foreign patent offices in the future.

Although third parties may offer a license to their technology, the terms of any offered license may not be acceptable and the failure to obtain a license or the costs associated with any license could cause our business, financial condition and results of operations to be materially and adversely affected. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful. Furthermore, a successful claimant could secure a judgment, or we may agree to a settlement that prevents us from distributing certain products or performing certain services or that requires us to pay substantial damages, including treble damages if we are found to have willfully infringed such claimant’s patents or copyrights, royalties or other fees. Any of these events could seriously harm our business financial condition and results of operations.

~~The~~Risks ~~portfolio~~Relating ofto ~~patents~~our ~~and~~Technological ~~trade secrets~~Relationship ~~purchased~~with ~~from Network Foundation Technologies, LLC have a high level of Intellectual Property (“IP”) risk.~~Nasdaq

~~All~~If ~~patents~~the ~~are~~NYIAX/Nasdaq ~~subject~~platform does not operate up to ~~risk~~technological ~~factors~~expectations, ~~that~~we may ~~diminish~~ ~~their~~be ~~value~~adversely affected.

~~Before~~We ~~purchasing~~expect ~~the portfolio of patents and trade secrets from Network Foundation Technologies, LLC (“Nifty”), the Company retained an independent valuation firm~~ to ~~perform~~ abe ~~risk~~dependent ~~assessment of the portfolio of patents and trade secrets purchased from Nifty. Each patent in the portfolio was read and assessed based~~ on arelationships set of risk criteria (including, but not limited to, IP status, type of infringement, infringement detection, substitutes and market readiness). The valuation firm applied scores and weights based on the assessment to generate an IP risk adjustment factor and this percentage is applied directly to the net present value of the patents (an IP risk adjustment factor with ~~a lower percentage~~ ~~indicates~~third ~~less~~parties ~~risk).~~particularly ~~The~~our ~~valuation~~agreements ~~firm determined a possible discount rate range was between twenty five percent (25%) and ninety per cent (90%) (~~with aNasdaq ~~lower percentage is better) and the valuation firm applied a risk assessment discount rate of eighty two percent (82%)~~ to ~~patents~~successfully ~~acquired~~commercialize ~~from~~our ~~Nifty.~~planned ~~The~~product valuation firm’s assessment indicated the patents acquired from Nifty have a high level of IP risk, primarily due to the age of the patent portfolio and patent expirations before the end of the licensing termlines. ~~The~~Our ~~valuation firm~~relationship ~~determined~~with ~~that other factors that lowered the score of the patents acquired from Nifty include: smaller size of the portfolio;~~Nasdaq ~~infringement detection; and the potential for invent-on-top IP from competitor. To compensate for the high risk, the company~~ is ~~reviewing various~~critical ~~plans~~ to ~~update~~our ~~and~~commercial ~~expand~~success ~~the~~and ~~portfolio~~any ~~with~~deterioration ~~new~~or ~~patent~~termination ~~filings. As~~ of ~~the date of~~ this ~~prospectus,~~relationship ~~the~~would ~~Company~~result ~~has~~in ~~not adopted~~ a ~~plan~~material toadverse ~~expand the portfolio with new patent filings. The cost to update and expand the new patents can be significant and there can~~effect beon noour ~~assurance~~business ~~that we will be successful in updating~~ and ~~expanding~~could ~~the~~cause ~~portfolio~~us ~~with~~to ~~new~~cease ~~patent filings~~operations. ~~See “Business — Intellectual Property” beginning on page 78 of this prospectus for information on expired patents.~~

Publishers and advertisers may not migrate to the NYIAX platform and continue to use other existing platforms in the market. In such case, the Company will not meet its requisite minimum revenue goals for its agreement with Nasdaq, which could cause the Company to scale down or discontinue its operations.

If the NYIAX/Nasdaq platform does not operate up to technological expectations with respect to functionality and efficiency as compared to its competitors, it is unlikely that publishers and advertisers will continue to use the system thereby adversely affecting the Company’s ability to conduct business and its future operations and financial results.

Our technological relationship with NASDAQ is not an endorsement by NASDAQ of our company, this Offering, the value of the securities being offered, the success or failure of this Offering or the approval by NASDAQ of a listing of our Common Stock.

We have entered into commercial agreements with Nasdaq Technology AB (“NASDAQ”) to build the NYIAX platform. Our commercial relationship with Nasdaq should not be viewed as an endorsement by NASDAQ of our company, this Offering, the value of the securities being offered, the success or failure of this Offering or the approval by NASDAQ of a listing of our Common Stock. Nasdaq has not endorsed our securities or this offering and our commercial relationship with Nasdaq does not have any bearing on whether our application to list our common stock on the Nasdaq Capital Market will be approved. Investors should not view our relationship or agreement with NASDAQ as anything other than a commercial agreement among two unrelated parties.

Our relationship with NASDAQ commits the Company to make annual and revenue sharing payments to the Nasdaq.

We have entered into commercial agreements with Nasdaq for services related to our platform. Our commercial relationship with Nasdaq requires the Company to make annual and revenue sharing payments to the Nasdaq which the Company has not made on a timely a basis. The Company and Nasdaq have negotiated an amended payment schedule. If the Company is unable to meet its commitments in the future, the Nasdaq may terminate the relationship which would have a material adverse effect on the Company.

Risk Relating to Possible Regulation and Supervision

Interest-based advertising, or the use of data to draw inferences about a user’s interests and deliver relevant advertising to that user, has come under increasing scrutiny by legislative, regulatory, and self-regulatory bodies in the United States and abroad that focus on consumer protection or data privacy. There may be some self-regulatory activities with regard to rules enforcement and market surveillance required by us in order to maintain an orderly market and forestall any external regulation needs.

We do not believe that our current activities and services provided to buyers and sellers of advertising trigger SEC securities regulation or futures/derivatives regulation of the United States Commodity Futures Trading Commission (“CFTC”). If in the future our services and products are expanded to include products and/or services that could trigger regulatory oversight by a market regulator (e.g. CFTC and/or SEC), we will engage with the appropriate regulator in a timely manner to ensure full compliance with applicable statute and regulations. There can be no assurance that we will be able to comply with future regulatory requirements, in which case we could be forced to discontinue applicable operations.

Risks Related to the Offering, Our Securities and the Securities Markets.

Our officers have broad discretion in the use of proceeds.

The executive officers of the Company will have broad discretion in allocating the net proceeds of the Offering, including for any of the purposes described in the section entitled “Use of Proceeds”, which creates uncertainty for shareholders and could adversely affect the Company’s business, prospects, financial condition and results of operations. You will not have the opportunity as part of your investment decision to assess whether our management is using the net proceeds appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. Because of the number and variability of factors that will determine our use of our net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Pending their use, we may invest our net proceeds from this offering in short-term, investment-grade, interest-bearing securities. The net proceeds may be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our share price. The net proceeds from this offering may also be placed in investments that do not produce income or that lose value.

We have no dividend policy.

The Company does not presently intend to pay cash dividends in the near future, as any earnings must be retained for use in current operations. Investors must not look to an investment in the Company as a source of cash distributions.

There is potential future dilution to our current shareholders’ ownership in the Company.

The Company intends to raise additional capital in the future for working capital and business expansion. As a result, our shareholders will likely experience significant dilution of their ownership in the Company.

Future issuances of our common stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our common stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our common stock. In all events, future issuances of our common stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our common stock. In connection with this offering, we will enter into a lock-up agreement that prevents us, subject to certain exceptions, from offering additional shares of capital stock for up to 24 months after the closing of this offering, as further described in the section titled “Underwriting.” In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our common stock may become available for resale, subject to applicable law, including without notice, which could reduce the market price for our common stock.

Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of common stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common stock.

Our officers and directors and other significant investors (the “Group”) own a significant amount of our outstanding common stock. As a result, the Group may have the ability to approve all matters submitted to our shareholders for approval.

As of June 30, 2024, our officers and directors will own approximately 15.5%, Network Foundation Technologies, LLC owns approximately 12.8%, Suwyn Investments, LLC owns approximately 7.1%, and Graham Mosley owns approximately 5.7% of our 15,690,719 outstanding voting shares.

Such persons may have the ability to significantly influence all matters submitted to our shareholders for approval including:

●

election of our board of directors;

●

removal of any of our directors;

●

any amendments to our articles of incorporation or our bylaws; and

●

adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

In addition, this concentration of ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.

We expect to incur significant additional costs as a result of being a public company, which may materially and adversely affect our business, financial condition and results of operations.

Upon completion of this offering, we expect to incur costs associated with corporate governance requirements that will become applicable to us as a public company, including rules and regulations of the SEC, under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Exchange Act, as well as the rules of the Nasdaq. These rules and regulations are expected to significantly increase our accounting, legal and financial compliance costs and make some activities more time-consuming. We also expect these rules and regulations to make it more expensive for us to obtain and maintain directors’ and officers’ liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Accordingly, increases in costs incurred as a result of becoming a publicly traded company may materially and adversely affect our business, financial condition and results of operations.

Our stockholders will experience additional dilution due to the 2023B Convertible Note Offering and the 2024 Convertible Note Payable.

2023B Convertible Note Payable offering

Pursuant to the 2023B Convertible Note offering we sold $1,970,000 of convertible notes to accredited investors. The closing of the offering occurred on June 28, 2023. The 2023B Convertible Notes bear interest at twelve percent (12.0%) per annum, which shall be paid as a Payment-in-Kind in our common stock. For approximately 86% of the outstanding principal and interest of the 2023B Convertible Note Payable, the conversion price is four dollars ($4.00) per share and in the event that the Company has not received an effective order from the SEC on its registration statement by February 14, 2024, the outstanding principal of the 2023B Convertible Note Payable shall automatically be converted into common stock of the Company at $2.00 per share. For approximately 14% of the outstanding principal and interest of the 2023B Convertible Note Payable the conversion price is two dollars ($2.00) per share.

The additional shares of our common stock issuable upon automatic conversion of the notes could cause the market price of our common stock to decline. In addition, the notes automatically convertible into equity securities would result in dilution of our existing stockholders’ equity interest.

2024A Convertible Note Payable

The Company has closed on approximately $1.3 million in the 2024A Convertible Note Payable offering. The 2024A Convertible Note Payable offering closed on May 28, 2024. The Offering consisted of two-year convertible notes with 10% interest payment-in-kind in Company common stock at two ($2.00) dollars, which shall be paid at maturity or upon conversion. Additionally, the Company issued with the Notes, warrant coverage at the rate of one hundred (100%) percent of the dollar value of the Note at two ($2.00) dollars per share as the strike price of the Warrants. The Warrants are for a period of five (5) years.

2024B Convertible Note Payable

As of February 14, 2025, the Company has closed on approximately $0.9 million in the 2024B Convertible Note Payable offering. The Offering consists of two-year convertible notes with 10% interest payment-in-kind in Company common stock at two ($2.00) dollars, which shall be paid at maturity or upon conversion. Additionally, the Company issued with the Notes, warrant coverage at the rate of one hundred (100%) percent of the dollar value of the Note at two ($2.00) dollars per share as the strike price of the Warrants. The Warrants are for a period of five (5) years.

2025A Convertible Note Payable Offering

Our management will have broad discretion in the use of the net proceeds from the 2023A Convertible Note Offering and the 2023B Convertible Note Offering, the 2024A Convertible Note Offering 2025A Convertible Note Offering and the 2024B Convertible Note Offering.

Our management will have broad discretion in the application of the net proceeds from the convertible notes offerings and you will not have the opportunity as part of your investment decision to assess whether such proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of our existing cash and the net proceeds from the convertible notes offerings, their ultimate use may vary substantially from their currently intended use. Our management might not apply our existing cash and the net proceeds from convertible notes offerings in ways that ultimately increase the value of your investment. The failure by our management to apply these funds effectively could harm our business. If we do not apply the net proceeds from the convertible notes offerings in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the past two fiscal years, the Company made sales of the following unregistered securities:

2023B Convertible Note Payable

On April 3, 2023, the Company commenced a Convertible Notes Offering (“2023B Convertible Note Payable”) pursuant to which it will offer up to $2,000,000 of convertible notes.

~~The~~Under ~~2023B Convertible Notes convert at two dollars ($2.00) per share concurrently when shares of common stock are sold to~~ the ~~public~~amended interms ~~the Financing Event, or in the event the Financing Event is not completed within eighteen (18) months from the date~~ of the individually issued notes, the Conversion Price shall be the reduced price of two dollars ($2.00) per share and the conversion amount shall automatically be converted into common stock of the Company at $2.00 per share on the Maturity Date. The annual rate of return is twelve percent (12.0%) per annum, which shall be paid as a Payment-in-Kind in the Company’s common stock valued at two dollars ($2.00) per share. Concurrently with the issuance of the 2023B Convertible ~~Notes~~ ~~Payable,~~Notes ~~the~~offered ~~company~~in ~~issued warrants (~~the ~~“Warrants”)~~convertible ~~The Warrants were issued at a rate of one half warrant issued for every $10 of~~ notes purchased with an exercise price of four dollars ($4.00) and one half warrant issued for every $10 of notes purchased with an exercise price of two dollars ($2.00). Each Warrant shall be exercisable for a period of five (5) years.:

● For approximately 86% of the outstanding principal and interest of the 2023B Convertible Note Payable, the conversion price is four dollars ($14.00) per share and in the event that the Company has not received an effective order from the SEC on its registration statement by February 14,~~970~~ 2024,~~000~~ the outstanding principal of the 2023B Convertible Note Payable ~~were sold~~shall automatically be converted into common stock of the Company at $2.00 per share. For approximately 14% of the outstanding principal and interest of the ~~note~~2023B ~~offering~~Convertible ~~was~~Note ~~closed~~Payable the conversion price is two dollars ($2.00) per share.

~~Convertible~~● ~~Note~~The ~~payable – stockholder~~annual rate of return is twelve percent (12.0%) per annum, ~~founder~~ /which ~~related~~shall ~~party~~be paid as a Payment-in-Kind in the Company’s common stock valued at two dollars ($2.00) per share.

On● ~~September~~Warrants ~~25, 2023, Mark Grinbaum, a founder, shareholder, and service provider, agreed to loan~~ (the ~~Company~~“Warrants”) ~~$100,000,~~were ~~with~~issued ~~interest accruing~~ at ~~the~~a ~~annual~~ rate of ~~4%,~~two ~~due~~and inone 60half ~~days, or~~warrants ~~upon~~issued ~~trading~~for ofevery ~~the~~$10 ~~Company’s~~of ~~common~~Notes ~~stock~~purchased onwith ~~the~~an ~~NASDAQ~~exercise ~~Exchange,~~price ~~whichever~~of isfour ~~sooner~~dollars ($4.00) Onand ~~October~~two ~~26, 2023, the Company~~ and ~~Mark~~ ~~Grinbaum~~one ~~further~~half ~~agreed~~warrants ~~that~~issued ~~upon~~for ~~trading~~every $10 of ~~the~~Notes ~~Company’s~~purchased ~~common~~with ~~stock~~an onexercise ~~the~~price ~~NASDAQ~~of ~~Exchange,~~two ~~the~~dollars ~~convertible notes payables to Mark Grinbaum and related interest convert to NYIAX common shares at~~ ($42.00). ~~per~~Each ~~share~~Warrant ~~The~~shall ~~loan~~be ~~was~~exercisable ~~recorded~~for asa period of ~~September~~five ~~30,~~(5) ~~2023 as a note payable – stockholder~~year. ~~. The funds were received on October 2~~$1,970,000 ~~2023.~~of ~~The~~2023B ~~short-term~~Convertible ~~loan~~Note ~~will~~Payable ~~provide~~were ~~additional short-term funding for operations during completion of the public offering process~~sold.

472024A Convertible Note Payable

OnThe ~~October~~Company ~~26,~~has ~~2023,~~closed ~~Carolina~~on ~~Abenante,~~approximately a$1.3 ~~founder,~~million ~~shareholder,~~in ~~officer~~the ~~and~~2024A ~~director,~~Convertible ~~agreed~~Note toPayable ~~loan~~offering. ~~the~~The ~~Company~~2024A ~~$100,000,~~Convertible ~~with~~Note ~~interest~~Payable ~~accruing~~offering atclosed ~~the~~on ~~annual~~May ~~rate of 4%~~28, ~~due~~2024. inThe 60Offering ~~days,~~consisted orof ~~upon~~two-year ~~trading~~convertible ofnotes ~~the~~with 10% interest payment-in-kind in Company’s common stock onat ~~the~~two ~~NASDAQ~~($2.00) ~~Exchange~~dollars, ~~whichever~~which isshall ~~sooner.~~be ~~Upon~~paid ~~trading~~at maturity ofor upon conversion. Additionally, the Company’s ~~common stock~~issued onwith the ~~NASDAQ Exchange~~Notes, ~~the~~warrant ~~convertible~~coverage ~~notes~~at ~~payables~~the torate ~~Carolina~~of ~~Abenante~~one ~~and~~hundred ~~related~~(100%) ~~interest~~percent of ~~convert~~the todollar ~~NYIAX~~value ~~common~~of ~~shares~~ the Note at two ($42.00) dollars per share. Asas of the ~~date~~strike ~~herein,~~price of the ~~funds have been received~~Warrants. The ~~short-term~~Warrants ~~loan~~are ~~will provide additional short-term funding~~ for ~~operations~~a ~~during~~period ~~completion~~ of five ~~the~~(5) ~~public offering process~~years.

2024B Convertible Note Payable

2025A Convertible Note Payable Offering

Payables to Shareholder-Founders and Conversion to Common Shares

Certain shareholder-founders purchased $100,000 in the form of convertible notes in October 2023. These convertible notes payables to certain shareholder-founders of $100,000 plus interest automatically converted to 50,328 common shares in December 2023 at a share price of $4.00 per share.

From November 27, 2023 through December 11, 2023, the Company sold $263,500 of convertible notes to certain shareholder-founders. These convertible notes payables to certain shareholder-founders of $263,500 plus interest automatically converted to 41,144 common shares during the three-month period ending March 31, 2024 at a share price of $4.00 per share.

During the six-month period ended June 30, 2024, the Company sold $198,000 of convertible notes to certain shareholder-founders, of which $48,000 was repaid. The $150,000 of convertible notes payable, plus interest at 4%, automatically converted to 37,747 common shares during the six-month period ending June 30, 2024 at a share price of $4.00 per share.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are included and filed with this report.

Exhibit		Exhibit Description
3.1		Amended and Restated Certificate of Incorporation of NYIAX, Inc. (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-1 filed on June 1, 2022, File No. 333-265357)
3.2		Bylaws of NYIAX, Inc. (Incorporated by reference to Exhibit 3.3 to Registration Statement on Form S-1 filed on June 1, 2022, File No. 333-265357)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1		Section 1350 Certification of Principal Executive Officer and Principal Financial Officer
101		Interactive Data Files
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Definition
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

48* Furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on ~~November~~February 14, ~~2023~~2025.

Person	Capacity	Date
/s/ Christopher Hogan	Interim Chief Executive Officer,	November 14, 2023
/s/ Teresa Gallo	Chief Executive Officer, President and	February 14, 2025
Christopher Hogan	President and Chief Operating Officer
Teresa Gallo	Chief Operating Officer
	(Principal Executive Officer)
/s/ William Feldman	Chief Financial Officer and Treasurer	~~November~~February 14, ~~2023~~2025
William Feldman	(Principal Financial and Accounting Officer)

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